The Southeast Asian country Taiwan took its most significant step yet toward formal crypto regulation on June 30, when the Legislative Yuan cleared the Virtual Asset Service Act in its third reading and forwarded it to President Lai Ching-te for his signature.
The Financial Supervisory Commission (FSC) described the new law as a meaningful upgrade to how Taiwan oversees digital assets, moving the country away from a system built primarily around anti-money laundering registration toward one that actively supervises operations, market conduct and consumer protection.
Seven categories of virtual asset businesses fall under the act’s scope: exchanges, trading platforms, transfer firms, custodians, underwriters and lending service providers. Each will now be subject to requirements spanning internal controls, cybersecurity standards, asset listing reviews, customer asset segregation, outsourcing practices, civil liability and financial reporting.
Any crypto business that wants to operate legally in Taiwan must first secure FSC approval. Firms that already completed AML registration before the law kicks in get a runway to make the transition, with 12 months to submit a license application and 21 months to clear the full approval process and obtain all required permits, according to FSC. If a firm needs a little more runway, the FSC can grant a single three-month extension, but that’s the limit. Miss the final deadline and the firm will lose the right to operate in Taiwan entirely.
Interestingly, Stablecoin issuers face a higher bar than other virtual asset businesses. Launching a token in Taiwan will require sign-off from both the FSC and the central bank before issuance can begin. On top of that, issuers must back their tokens with full reserves held in trust, submit to regular audits and keep the public informed through ongoing disclosures.
Steep penalties have also been introduced for violations. Running an unlicensed virtual asset service or issuing stablecoins without authorization exposes operators to up to seven years behind bars and fines of as much as NT$100 million, around $3.14 million. Meanwhile, market manipulation and fraud draw even harsher treatment, with prison terms stretching from three to ten years and financial penalties ranging from NT$10 million to NT$200 million, the equivalent of roughly $314,000 to $6.28 million.
