Taiwan Enacts Strict Virtual Asset Licensing Regime

Taiwan's Legislative Yuan gave final approval to the Virtual Asset Service Act on June 30, sending the measure to President Lai Ching-te for promulgation.

The law establishes full licensing and oversight by the Financial Supervisory Commission. Every virtual asset service provider must secure a license from the FSC prior to any operations. The FSC reportedly indicated that the framework replaces the prior anti-money-laundering registration approach with comprehensive supervision of business conduct and market integrity.

The statute identifies seven types of virtual asset service providers, specifically exchanges, trading platforms, transfer providers, custodians, underwriters, lenders, and a residual category for additional activities. Once licensed, operators will face requirements covering employee qualifications, risk management systems, independent audits, information security protocols, and procedures for adding or removing listed assets. Customer funds must remain separated from corporate accounts, periodic financial statements must be published, and firms will bear civil responsibility to clients even when delegating tasks.

Stablecoin issuers face separate approval and reserve requirements. Domestic issuance demands explicit consent from the central bank plus FSC clearance. Issuers must maintain 100 percent reserves in trust accounts, undergo routine audits, and provide ongoing public reporting.

Transition periods and penalties are clearly defined. Entities already enrolled in the AML regime will receive a grace period to submit license applications within 12 months after the law takes effect and to obtain full authorization within 21 months, plus one optional three-month extension. Failure to meet these cutoffs will prohibit continued business. Unauthorized operation of a platform or issuance of stablecoins reportedly carries a maximum seven-year prison term together with fines reaching NT$100 million (approximately $3.1 million). Convictions for fraud or market manipulation can result in three to 10 years of incarceration and penalties ranging from NT$10 million to NT$200 million (about $314,000 to $6.3 million).

The FSC will now draft implementing rules with industry input. The agency intends to collaborate with trade groups and additional parties while preparing detailed subordinate regulations. The island thereby aligns with several peers that have integrated virtual assets into formal licensed financial structures.