Taiwan Clears Legal Uncertainty With New Crypto Regulation Law

TLDR

• Taiwan passed the Virtual Asset Service Act to regulate the crypto industry and remove legal uncertainty.
• The law requires all crypto service providers to obtain approval from the Financial Supervisory Commission before operating.
• Existing firms must apply for licenses within 12 months and secure full approval within 21 months.
• Taiwan introduced strict rules on cybersecurity, internal controls, and client asset segregation.
• Stablecoin issuers must gain approval from both the central bank and the Financial Supervisory Commission.

Taiwan has passed a comprehensive crypto law, setting clear rules for digital asset businesses and ending long-standing regulatory uncertainty. The legislature approved the Virtual Asset Service Act and sent it to President Lai Ching-te for final approval. The move establishes licensing, compliance, and enforcement standards across Taiwan’s growing crypto sector.

Taiwan Sets Licensing Rules for Crypto Platforms

Taiwan lawmakers approved the Virtual Asset Service Act, which creates a formal framework for crypto operations across the country. The law requires all virtual asset service providers in Taiwan to obtain approval from the Financial Supervisory Commission. As a result, Taiwan moves from basic AML oversight to a full licensing regime.

Previously, Taiwan required crypto firms to complete anti-money laundering registration before offering services. However, the new law expands obligations and introduces stricter internal controls and cybersecurity standards. Therefore, Taiwan aims to align its digital asset sector with broader financial compliance practices.

Existing firms in Taiwan must transition into the new system within defined timelines set by regulators. Platforms that completed AML registration will have 12 months to apply for licenses. They must then secure full approval within 21 months, ensuring gradual compliance across Taiwan’s crypto industry.

Stablecoin Rules and Penalties Strengthen Oversight

Taiwan also introduced clear rules for stablecoin issuers under the new law. Companies must obtain approval from both the central bank and the Financial Supervisory Commission. In addition, Taiwan requires full reserve backing for all issued stablecoins.

The law sets strict penalties for violations, signaling stronger enforcement across Taiwan’s financial system. Illegal crypto operations could lead to seven years in prison and fines reaching NT$100 million. Meanwhile, fraud and market manipulation carry penalties of up to 10 years in prison.

Kevin Cheng, a Taiwanese lawyer, said the law removes ambiguity for many firms operating in Taiwan.

Traditional Finance Entry May Reshape Competition

The new framework allows traditional financial institutions to enter the crypto market in Taiwan. This shift could increase competition for existing crypto-native firms operating within Taiwan. Larger institutions may bring stronger compliance systems and financial resources into the sector.

Titan Cheng of the Taiwan VASP Association said the group will support implementation efforts. He explained that the association will help draft detailed rules on licensing and operations. Consequently, Taiwan aims to ensure a smooth transition while maintaining stability across its crypto ecosystem.

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