Taiwan unveils draft Virtual Asset Service Act to regulate crypto sector
The draft law introduces licensing requirements for VASPs
Taiwan’s Financial Supervisory Commission proposes new framework for virtual asset providers, stablecoin issuers, and investor protection measures.
Taiwan’s Financial Supervisory Commission (FSC) has released a draft version of the “Virtual Asset Service Act.” The proposed legislation outlines a comprehensive legal framework for Virtual Asset Service Providers (VASPs), stablecoin issuers, and regulatory oversight in an effort to increase market integrity, bolster investor protections, and support the island’s growing digital asset ecosystem.
What is known about the new law
- The draft law introduces licensing requirements for VASPs, including minimum capital standards, corporate governance, and personnel qualifications.
- Banks may be authorized to issue stablecoins pegged to the New Taiwan Dollar, subject to FSC approval.
- VASPs will be required to submit annual risk assessment reports and comply with anti-money laundering measures by January 2025.
- The FSC will have enforcement powers, including inspection authority and the ability to impose penalties for non-compliance.
Toward Regulatory Clarity and Investor Protection
Under the proposed Virtual Asset Service Act, VASPs will be required to obtain a license, maintain adequate capitalization, and demonstrate internal controls and compliance infrastructure. The legislation also mandates that VASPs submit annual risk assessments to the FSC and adhere to updated anti-money laundering (AML) protocols, which were introduced in October 2024 and become fully enforceable starting January 1, 2025.
Stablecoin issuance is also addressed. The draft law enables financial institutions to issue fiat-backed stablecoins—specifically pegged to the New Taiwan Dollar—pending FSC review and approval.
The FSC opened a 60-day public consultation period upon publication of the draft, inviting industry stakeholders to provide feedback. The final version of the bill is expected to be submitted to the Executive Yuan for legislative consideration by June 30, 2025.
If enacted, the Virtual Asset Service Act will serve as the backbone of Taiwan’s virtual asset oversight, potentially influencing broader regional regulatory trends.
The legislation aligns with Taiwan’s broader effort to position itself as a crypto-friendly yet well-regulated jurisdiction. In early 2025, the FSC launched a pilot program for crypto custody and approved several foreign crypto ETFs for professional investors, signaling a maturing regulatory stance.
In addition, we informed that South Korea’s Financial Services Commission (FSC) has announced plans to lift its longstanding ban on corporate cryptocurrency trading, paving the way for businesses to participate in the digital asset market by the end of 2024.
