Taiwan's landmark Virtual Asset Service Law (VASL) passed its article-by-article review in the Legislative Yuan's Finance Committee on June 3, securing cross-party consensus without the need for inter-party negotiation. The 56-article bill is now headed to the full chamber for second and third readings.
FTX Collapse Fueled Legislative Push
The push for dedicated crypto regulation gained momentum after the FTX exchange collapse three years ago, which caused losses of around 60 billion New Taiwan dollars for over 300,000 Taiwanese investors. The Executive Yuan submitted the draft on April 2, designating it a priority bill for the current legislative session, which ends around July. Financial Supervisory Commission (FSC) Chairman Peng Jin-long previously stated that after third reading, at least six months are needed to formulate nine subsidiary regulations — eight focusing on VASP supervision and one on stablecoins — meaning the law could fully take effect as early as the first half of 2027.
Key Provisions: VASP Licensing, Stablecoins, Penalties
The nine-chapter bill defines seven business categories for virtual asset service providers: exchange, trading platform operation, transfer services, custody, underwriting, lending, and other businesses approved by regulators. Financial institutions are allowed to operate VASP businesses directly under their existing banking licenses without setting up separate subsidiaries. Penalties for fraud and manipulation carry a maximum of 10 years in prison and fines up to NT$200 million.
Derivatives Regulation and Stablecoin Issuance
Lawmaker Ge Ru-jun demanded the FSC draft rules for virtual asset derivatives within one year of the law's effective date, with semi-annual reviews to gradually include perpetual contracts, copy trading, discretionary accounts, and options. The bill also requires the FSC to set a 15-day review period for token listing and delisting applications by platforms. Stablecoin issuance under Articles 34-36 requires prior approval from the FSC in consultation with the central bank; issuers must maintain fully backed reserves in segregated accounts, undergo regular audits, and are prohibited from paying interest to holders. Foreign stablecoins like USDT and USDC must also receive approval for trading in Taiwan.
Transition Period and Existing Players
Existing VASPs have a nine-month window to apply for licenses after the law takes effect, with 18 months to obtain full approval. Only eight firms currently hold anti-money laundering registration — MaiCoin, BitoGroup, XREX, Heya, Fusheng, Cross-Chain, Tuohuang, and Zhongliang Technology — down from about 26 in early 2024. Financial institutions are already positioning: Union Bank invested roughly US$27.8 million for a nearly 10% stake in MaiCoin's parent; Tether, Taiwan's National Development Fund, SBI Investment, and CDIB have stakes in XREX; and Fubon Financial launched the TWEX exchange through its Fusheng subsidiary. At least four financial holding companies are actively pursuing VASP acquisitions.