Taiwan’s legislature passed the Virtual Asset Service Act on June 30, creating the island��s first dedicated legal framework for the crypto sector. Under the new law, virtual asset service providers, or VASPs, must obtain approval before operating. Running a VASP business or issuing stablecoins without approval can lead to up to 7 years in prison and a fine of up to NT$100 million.
Pre-approval becomes mandatory for all VASP operations
The law places VASPs under a licensing system overseen by the Financial Supervisory Commission. Companies must apply based on their business category, and any opening, suspension, resumption, closure, dissolution, or change in business scope requires prior approval. It also requires firms to establish internal controls and audit mechanisms, strengthen information system security, and adopt business continuity policies.
That shifts oversight from the older anti-money laundering registration model to an ex-ante review system. Existing operators that already completed AML registration are given a transition window: they must file for a license within 12 months after the law takes effect and obtain approval within 21 months, or they will be treated as unlicensed.
Stablecoin issuers face approval, central bank consultation, and full reserves
Stablecoin provisions are among the most closely watched parts of the bill. The law defines stablecoins as virtual assets linked to the value of one or more fiat currencies in order to maintain price stability. Issuers must apply to the FSC for approval, and the approval process requires prior consultation with the central bank.
The reserve rules are strict. Issuers must maintain full reserve assets, keep those assets with domestic financial institutions, and separate them completely from their own property. Apart from statutory reserves, the remaining reserve assets must be fully placed in trust with financial institutions and reviewed on a regular basis. The law also explicitly bans issuers from paying any interest or yield on stablecoins.
Holder protections are written into the statute as well. Parties other than stablecoin holders cannot claim rights over reserve assets. If an issuer goes bankrupt, those reserve assets are excluded from the bankruptcy estate, and holders receive priority claims on them.
Fraud and market manipulation carry penalties of up to 10 years
The penalty structure has two layers. Unlicensed VASP activity or unauthorized stablecoin issuance is punishable by up to 7 years of imprisonment and a fine of up to NT$100 million. Cases involving fraud or market manipulation face much heavier punishment.
The law says conduct that directly or indirectly affects trading prices or supply and demand can bring 3 to 10 years in prison, along with fines ranging from NT$10 million to NT$200 million.
Derivatives planning requested; stablecoins may start with financial institutions
An attached resolution asks the FSC to submit, within one year of the bill’s passage, a plan for allowing the virtual asset industry to offer derivative virtual asset products and services, leaving room for products such as futures and options.
The report also cited FSC Chair Peng Jin-lung as previously saying that stablecoin issuance will initially be limited to financial institutions. Participation by non-financial companies may be opened later after the market framework matures, with implementation expected as early as the second half of 2026.
Binance’s head of Asia-Pacific said the company welcomed Taiwan’s move to build a complete regulatory framework for virtual assets and said Binance had taken part in related legislative discussions by sharing experience and observations from different markets.