According to reports from Liberty Times and Economic Daily News, the Executive Yuan meeting on the 2nd passed the draft of the “Virtual Asset Services Act,” establishing Taiwan’s first dedicated regulatory framework for the virtual asset market. The draft sets up a licensing system for virtual asset service providers (VASP), clearly regulates the issuance of stablecoins, and imposes severe penalties for market manipulation and fraudulent conduct, with a maximum of 10 years imprisonment and an additional fine of 200 million New Taiwan dollars. The Financial Supervisory Commission (FSC) said that the overall direction follows the principle of “gradual opening,” seeking a balance between financial innovation and sound regulation.
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The four phases of the virtual asset special law go live; VASP is incorporated into licensed-system management
Premier 卓榮泰 stated that financial technology is developing rapidly, and that virtual asset applications are changing traditional financial transaction methods. The FSC, drawing on international regulatory trends, will advance the special law “Virtual Asset Services Act,” with anti–money laundering at its core, planning to strengthen supervision in four phases step by step. At the same time, it will bring virtual asset service providers into the financial anti-fraud system, and through industry-wide joint prevention and cooperation between the public and private sectors, build a more complete protection network.
According to the draft, VASPs must be classified by business nature, covering seven major categories: traders, platform operators, transfer agents, custodians, underwriters, and lenders, among others. It also adopts a two-phase licensing system—after obtaining approval from the competent authority and being issued a license, they may officially conduct business.
The draft also requires that VASPs must be specialized companies, and their paid-in capital and organizational form must meet certain requirements; financial institutions, after obtaining a license, may engage in the relevant businesses concurrently.
In terms of transaction security, the draft stipulates that users’ assets must be kept segregated from the VASP’s own property for custody. Statutory currencies must be placed into trust, and all receipt and payment of New Taiwan dollars or foreign currencies must be handled through dedicated bank deposit accounts, ensuring that each transaction leaves a record. It also replaces cash transactions with online trading to fully prevent money-laundering activities.
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Stablecoin issuance requires a licensing threshold: banks first, gradual opening
Regarding stablecoin regulation, the draft clearly states that stablecoins issued within Taiwan must obtain a license after the FSC consults and coordinates with the Central Bank and obtains approval. Issuers may only take the form of a joint-stock company, and the minimum paid-in capital will be set separately by the FSC. Issuers must establish and maintain certain reserve assets, store them with domestic financial institutions, and must keep them independently and undergo periodic audits.
The draft also stipulates that issuers may not pay interest or returns in any form, and must ensure that holders can redeem at face value at any time.
FSC Vice Chairperson 陳彥良 explained that stablecoins are not limited to issuance only by banks, but initially they will be bank-prioritized. The reason is that banks, in terms of capital and risk management, are better able to meet regulatory thresholds. Other businesses will, depending on their business nature, set corresponding requirements for paid-in capital and business guarantee deposits. Detailed specifics will be explained to the public after the subsidiary regulations are passed.
As for whether Taiwan will in the future open virtual currency derivative products, 陳彥良 said the direction will also be gradual opening—there will not be a full release all at once, but it will not restrict room for industry development either.
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Severe punishment for market manipulation and fraud; up to 10 years imprisonment plus a further fine of 200 million
The draft also includes clear provisions regarding criminal liability. Those who issue stablecoins without permission may face, at the maximum, imprisonment of up to 7 years, and may also be subject to a fine of up to 100 million New Taiwan dollars. If the conduct involves acts such as forgery and fraud, concealing material information, or manipulating market prices, criminal liability will be further raised to imprisonment of more than 3 years and up to 10 years, with a maximum fine of 200 million New Taiwan dollars in addition, and the perpetrator must bear liability for damages.
In addition, the draft requires that when VASPs discover suspected unlawful conduct or abnormal transactions, they must immediately suspend the related transactions and cooperate with the government to strengthen anti-crime efforts against fraud.
Under the exit mechanism, the draft stipulates that when a VASP’s business or financial condition deteriorates and it poses risks to customer interests, the FSC may prohibit the transfer of its assets or order the transfer of its business. If the operator can no longer continue operating, the FSC may designate another VASP to take over the business, to protect the safety of users’ assets.
Welcome overseas operators to land in Taiwan; the government maintains an open and prudent approach
Regarding the issue of overseas virtual asset service providers developing in Taiwan, 陳彥良 said the government maintains a positive, prudent, and open attitude, and will conduct review in a spirit of openness and inclusiveness, under the premise of balancing financial innovation and industry development, aiming to attract high-quality operators to establish local operations while reducing regulatory gray areas.
At present, there are 8 businesses in Taiwan that have completed AML registration for VASP. After the “Virtual Asset Services Act” is passed, a more explicit legal regulatory framework will be established, which will help industry participants comply, and will also benefit the long-term healthy development of the overall industry.
This article Premier’s office approves the draft of the “Virtual Asset Services Act”! Maximum 10 years for market manipulation; stablecoins take a gradual opening approach was first published on 鏈新聞 ABMedia.
