Taiwan’s Virtual Asset Service Act Draft

Taiwan’s Financial Supervisory Commission (FSC) released the draft of the “Virtual Asset Service Act” to improve regulatory clarity for virtual asset businesses and enhance investor protections.

Key Provisions of the Draft

On March 25, the FSC unveiled this draft, which includes provisions for:
– Licensing of Virtual Asset Service Providers (VASPs)
– Standards for stablecoin issuance
– Measures to improve market integrity and protect investors

The draft stipulates requirements for VASPs regarding organizational structure, capital, and personnel qualifications. In addition, it allows banks to issue stablecoins pegged to the New Taiwan Dollar, pending FSC approval and compliance with established criteria. Furthermore, the FSC is empowered to conduct inspections, enforce compliance, and impose penalties for non-compliance.

Public Consultation

The FSC has opened a 60-day public consultation period for stakeholders to offer feedback on the draft, intending to submit the finalized law to the Executive Yuan by June 30.

Broader Impact

The “Virtual Asset Service Act” reflects Taiwan’s commitment to regulatory clarity in the virtual asset space, ensuring investor protection and tackling money laundering. These efforts began in October 2024, when the FSC announced updated Anti-Money Laundering measures requiring VASPs to register with the government by September 2025, or face penalties. These regulations will take effect on January 1. VASPs must also prepare and submit a comprehensive risk assessment report annually by the end of March.

Supporting Institutional Adoption

In addition to offering regulatory clarity, the FSC encourages institutional adoption of cryptocurrencies through various strategic initiatives. Notably, the FSC launched a pilot program for crypto custody services in early 2025 and approved several foreign crypto exchange-traded funds for professional investors.