Taiwan Tightens Crypto Oversight with New Licensing and Reserve Rules

Key Takeaways:

• All virtual asset service providers must obtain a Financial Supervisory Commission (FSC) license.
• Stablecoin issuers require dual approval and must maintain 100% reserves.
• Violations carry severe penalties, including up to 7 years in prison and heavy fines.

Taiwan’s Legislative Yuan passed the Virtual Asset Service Act in its third reading, sending it to President Lai Ching-te for signing. Once enacted, the Executive Yuan will determine the implementation date. All crypto operators must obtain a license from the Financial Supervisory Commission (FSC) to operate legally.

Licensing and Compliance Rules

Existing AML-registered firms will receive a 12-month grace period, allowing up to 21 months to secure full approval. Requirements include cybersecurity safeguards, segregation of customer funds from company assets, and stronger governance and risk management frameworks.

Stablecoins and Market Rules

Stablecoin issuers must obtain approval from both the central bank and FSC, and maintain 100% asset reserves at all times. The Bank for International Settlements (BIS) has warned of foreign-exchange risks associated with dollar-pegged stablecoins.

Unauthorized crypto platform operations may lead to prison sentences of up to seven years and fines reaching NT$100 million (about $3.14 million). Fraud or market manipulation carries harsher penalties, including three to ten years' imprisonment and fines between NT$10 million and NT$200 million.