Taiwan's Legislative Yuan has passed the Virtual Asset Service Act, establishing a full regulatory framework for the crypto industry. The bill, passed in its third reading on June 30, now awaits President Lai Ching-te's promulgation, after which the cabinet will determine its effective date.
Under the new law, virtual asset service providers (VASPs), including exchanges, trading platforms, custodians, and lenders, must obtain approval from the Financial Supervisory Commission (FSC) before operating. Stablecoin issuers will require dual approval from both the central bank and the FSC and must maintain full reserve backing. The legislation also sets strict rules on cybersecurity, client asset segregation, and internal controls.
The law imposes severe criminal penalties: unlicensed VASP operations or stablecoin issuance can lead to up to seven years in prison and fines of up to NT$100 million (around $3.14 million). Fraud and market manipulation carry three to ten-year sentences and fines from NT$10 million to NT$200 million. Existing businesses that have completed anti-money laundering registration will have 12 months to apply for a license and 21 months to secure full approval, with a one-time possible three-month extension.
Kevin Cheng, a crypto lawyer, noted that the law ends the legal gray area, exposing firms to new competition from traditional financial institutions that will also be allowed to operate VASPs. Titan Cheng, chairman of the Taiwan VASP Association, said the industry group will help members adapt to the transition. The FSC will continue drafting sub-rules for licensing, personnel, and internal controls, aiming to bring Taiwan in line with markets like the EU, Japan, and South Korea.
