Legislative Milestone and Timeline
Taiwan's Legislative Yuan has passed the Virtual Asset Service Act, which now awaits signing by President Lai Ching-te. The law is expected to be officially gazetted within 10 days, with an effective date to be announced. Previously, the crypto industry in Taiwan operated under minimal oversight, relying only on AML registration with the Financial Supervisory Commission (FSC). The new act aims to create a comprehensive regulatory framework aligned with FATF standards.
Key Regulatory Requirements
The act mandates that all virtual asset service providers (VASPs), including exchanges, custodians, and wallet providers, must obtain a license from the FSC. Platforms that have already completed AML registration have a 12-month transition period to apply, and the FSC then has 21 months to approve or reject each application. Stablecoin issuance and management require dual approval from the Central Bank of the Republic of China (Taiwan) and the FSC, with issuers required to maintain full reserves. Other compliance obligations cover cybersecurity, segregation of client assets, and internal controls.
Criminal Penalties and Market Implications
The law introduces severe criminal penalties: operating a VASP without a license carries a maximum prison sentence of 7 years and a fine of up to NT$100 million (approximately $3.14 million). Market manipulation in virtual assets is punishable by up to 10 years in prison and a fine of up to NT$200 million (approximately $6.28 million). Industry observers note that crypto businesses that previously thrived on regulatory ambiguity can no longer rely on gray-area operations. Traditional financial institutions will now be eligible to apply for VASP licenses, intensifying competition for incumbent crypto companies. The new regime is expected to attract institutional players but may force smaller, less compliant firms out of the market.