Taiwan Passes Major Crypto Law, Ending Legal Uncertainty for Digital Assets
Taiwan has taken a big step toward regulating its cryptocurrency industry. On Tuesday, the country’s parliament passed the Virtual Asset Service Act in its third and final reading.
Key Highlights of Taiwan’s New Crypto Law
The Legislative Yuan approved the bill, which now goes to President Lai Ching-te for promulgation. The law is expected to take effect soon after the cabinet sets the implementation date.
Under the new Virtual Asset Service Act, all crypto platforms and stablecoin issuers must obtain official licenses from the Financial Supervisory Commission (FSC) before operating legally.
The law introduces stricter rules on:
- Cybersecurity
- Client asset protection
- Internal controls
Businesses already registered for anti-money laundering (AML) will have 12 months to apply for a license and 21 months to complete the full approval process.
Stablecoin Regulations
Companies wanting to issue or manage stablecoins must get approval from both the central bank and the FSC. They are also required to maintain full reserve backing for all stablecoins.
Strong Penalties for Violations
The law includes tough criminal penalties:
- Illegal operation of crypto services or stablecoins: Up to 7 years in prison and fines up to NT$100 million (~$3.14 million)
- Fraud or market manipulation: 3 to 10 years in prison and fines between NT$10 million to NT$200 million
Industry Reactions
Legal experts say the new framework brings much-needed clarity. Many crypto businesses that operated in a legal gray area will now face clear rules.
Kevin Cheng, founder of Harmony Governance Advisors, noted that traditional financial institutions will soon be allowed to enter the crypto space. This is expected to increase competition for existing crypto firms.
Titan Cheng, Chairman of the Taiwan VASP Association and founder of BitoGroup, stated that the association will work closely with regulators to create smooth implementation rules and support companies during the transition period.
