Unpacking Taiwan's Virtual Asset Service Act: What Crypto and Stablecoin Issuers Need to Know

Key takeaways

• Taiwan's Legislative Yuan passed the Virtual Asset Service Act (虛擬資產服務法) at the third reading on June 30, 2026 — the island's first dedicated statute for virtual asset service providers (VASPs).
• The Act is not yet in force. The FSC has said the Act and its nine subordinate regulations will take effect together, in the first quarter of 2027 at the earliest.
• Supervision moves from AML registration to permission-based licensing across seven VASP categories, extending requirements to include prudential, custody, cybersecurity, and market-conduct obligations.
• Stablecoin issuance requires both central bank agreement and FSC permission, with full reserves held in trust, redemption at face value, and a prohibition on paying interest or yield.
• Existing AML-registered firms get 12 months to apply and 21 months to be licensed, but neither clock starts until the Executive Yuan sets the commencement date.
• Two things are already moving ahead of the Act going live: draft Travel Rule amendments out for consultation until September 14, 2026, and a fraud caseload that gives the new market-conduct provisions their political weight.

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On June 30, 2026, Taiwan's Legislative Yuan passed the Virtual Asset Service Act (虛擬資產服務法) at the third reading, giving the island its first dedicated statute for virtual asset service providers (VASPs). In the Financial Supervisory Commission's own framing, the Act lifts supervision of VASPs from anti-money laundering (AML) alone to comprehensive oversight of sound operation and market order.

The Executive Yuan will set the commencement date separately, and the FSC is still drafting the subordinate regulations the Act authorizes. Speaking on the day of passage, FSC officials said the Act and its subordinate rules would take effect together, in the first quarter of 2027 at the earliest.

For firms with a Taiwan nexus, this is a scoping window, and the only period in which they will be able to build against the rules before the licensing clock starts running.

What is the Virtual Asset Service Act?

Until now, Taiwan has regulated crypto businesses primarily through AML law. Article 6 of the Money Laundering Control Act (洗錢防制法), in force since November 30, 2024, requires any business or person providing virtual asset services to complete AML registration with the FSC before operating, and requires providers established outside Taiwan to incorporate a local company or branch first. Operating without that registration carries up to two years' imprisonment, detention, or a fine of up to TWD 5 million (approximately USD 157,000), with corporate offenders facing up to ten times that amount. The registration conditions themselves sit in a separate FSC regulation covering application requirements, custody segregation, listing review, wallet management, and information security.

That regime produced a small compliant market. When the FSC published its list of registered providers on September 22, 2025, it named nine firms. Eight remain registered today.

The Virtual Asset Service Act does not replace that AML baseline; it builds a prudential and conduct regime on top of it. The Act covers providers' financial and business operations, the fitness of responsible persons and business staff, internal control and audit systems, information security management, listing and delisting review, segregated custody of customer assets, outsourcing, civil liability to customers, and financial reporting.

It defines seven categories of VASPs, each requiring FSC permission:

• Exchange providers (交換商)
• Trading platform operators (交易平台商)
• Transfer providers (移轉商)
• Custody providers (保管商)
• Underwriters (承銷商)
• Lending providers (借貸商)
• Other providers designated by the competent authority (其他)

Two important callouts: Lending is named as a category in its own right, which will capture firms that have not previously thought of themselves as holding a licensable permission. And the residual category is a deliberate hedge where it gives the FSC a route to bring new service models under the statute without returning to the legislature each time the market invents something.

The Taiwan VASP Association said the Act marks the industry's entry into governance under a dedicated financial statute, and set out three priorities: assisting regulators in drafting the subordinate regulations to enable a smooth transition; aligning members with international AML, safeguarding, and investor protection standards while addressing unlicensed offshore platforms; and strengthening public-private partnerships to block illicit fund flows.

How does the Act impact crypto businesses in Taiwan?

The bill the Executive Yuan approved on April 2, 2026 runs to seven chapters and 56 articles, and the FSC has now published the full article text with the Legislative Yuan’s approval.

The bar to obtain license becomes higher

Article 7 prohibits operating any virtual asset business without permission and a license. Article 11 requires providers to hold a minimum capital amount or allocated operating funds, and to deposit a guarantee deposit with a financial institution designated by the FSC. In both cases, the amounts are set by the FSC rather than fixed in the statute — which means the commercial threshold for entry to Taiwan's market is still an open question, and will be answered in the subordinate rules rather than the Act. Article 29 bars a provider from operating unless it has joined the industry association.

Incumbent financial institutions get a clearer route in 

Under Article 7, paragraph 4, a financial institution may, with FSC permission, concurrently operate virtual asset businesses and be treated as a provider under the Act. For crypto-native firms preparing applications, the competitive question is no longer only whether they can get licensed — it is who else will hold a license alongside them, and with what balance sheet.

Existing providers get a transition period rather than an immediate cutoff 

Firms that completed AML registration before commencement — and financial institutions already providing such services under FSC rules — have 12 months from the effective date to apply to the FSC for permission, and 21 months to obtain permission and a license. The licensing deadline can be extended once, by up to three months, where necessary.

While this timeline sounds generous, in practice it is two years to rebuild a control environment against rules that will only be fully legible once the subordinate regulations are published. The substantive gap for most AML-registered firms sits in custody segregation, cybersecurity management, listing and delisting governance, and personnel fitness — none of which can be closed in a licensing application alone.

There will be criminal consequences for unregistered operations 

Under the AML regime, unregistered operation would result in the natural person carrying up to two years' imprisonment and a fine of up to TWD 5 million (and the corporate would face a fine of up to ten times that amount – TWD 50 million). Under the Act, operating a virtual asset business or issuing a stablecoin without permission is separately criminalized under Articles 47 to 54 of the approved bill, carrying a maximum of seven years' imprisonment and a TWD 100 million fine. Fraud and manipulation of virtual asset prices carry three to ten years' imprisonment and fines of TWD 10 million to TWD 200 million.

This is a step change in exposure, signaling FSC’s increased commitment to enforcement against errant VASPs.

What changes for stablecoin issuers?

The Act creates Taiwan's first legal framework for stablecoins. Issuing a stablecoin in Taiwan requires the central bank's agreement and FSC permission — a dual-consent structure that tells you how the two regulators view the instrument. Issuers must maintain full reserve assets, place them in trust, and submit to periodic inspection and information disclosure.

The approved bill sets out the mechanics:

• Article 36 requires reserve assets to be held at a financial institution in Taiwan and kept independent of the issuer's own assets.
• Article 37 requires issuance and redemption at face value, bars the issuer from refusing a holder's redemption request, and prohibits paying any form of interest or return on the stablecoin.
• Article 38 excludes the reserve assets from the issuer's bankruptcy estate and gives holders priority of claim over them.

Article 37 removes yield as a distribution strategy outright. Article 38 makes the holder's claim survive the issuer's failure. The design intent is that a Taiwan-issued stablecoin behaves like a claim on segregated reserves rather than a liability of an operating business — and that has consequences for how issuers fund themselves, not just how they report.

Stablecoins issued outside Taiwan are treated separately. Under Article 35, a provider may only handle a stablecoin that is either licensed for issuance in Taiwan or has received the FSC's consent to be traded there. For platforms, that turns listing decisions on foreign stablecoins into a permission question, and one worth mapping now rather than at commencement.

What else should compliance teams be taking note of?

Two workstreams run in parallel with licensing preparation, both with more imminent deadlines. 

The Travel Rule 

On August 13, 2026, the FSC published a consultation on draft amendments to Articles 7, 14, and 18 of the AML and counter-terrorist financing regulation for VASPs (提供虛擬資產服務之事業或人員防制洗錢及打擊資恐辦法), with the consultation period running to September 14, 2026.

Under the draft amendments, a transfer above TWD 30,000 (approximately USD 940) requires the originator's date of birth and residential address (or for a legal person, an official identification number and registered address) plus the country and city of the beneficiary (or for a legal person, an official identification number and the country and city where they are registered). The beneficiary institution must check the information it holds against the name and wallet details supplied by the originating or intermediary institution. The amendments take effect on the date of publication, with the scope and timetable for applying them set by the industry association subject to FSC approval. The Taiwan VASP Association has indicated the requirements will likely apply to domestic provider-to-provider transfers from October 2026, and may extend to cross-border transfers by the end of 2027.

Firms waiting for the Act to arrive before investing in Travel Rule data infrastructure will find the new obligation lands first.

Fraud exposure 

Taiwan's National Police Agency recorded 197,595 fraud cases in 2025, involving 199,723 victims. Investment fraud was the single largest category, accounting for 58,675 victims — 29.69% of the total. In May 2026, the Taipei District Prosecutors Office indicted ten defendants, nine of them in custody, over a decentralized finance lending platform that issued its own virtual assets and operated a fake loan-wallet structure. Prosecutors put the case at 1,570 victims and TWD 5.73 billion (approximately USD 180 million).

This is the context the Act's market-conduct provisions were written into, and it explains their severity. It also gives the FSC and prosecutors a dedicated statutory basis for pursuing manipulation and fraud in virtual assets, rather than working through general fraud provisions.

Counterparty status

Firms serving Taiwanese customers from outside the jurisdiction should be reviewing counterparty exposure now. As permissions are granted and the FSC publishes licensed entities, exposure to platforms operating without permission stops being an ambiguity and becomes a documented compliance risk.

What lies ahead

The substance now moves to the subordinate regulations. The FSC has said it will complete nine of them — covering provider establishment, personnel management, financial and business conduct, internal controls, outsourcing, account and suspicious transaction management, association governance, financial reporting, and stablecoin permission and management — and will consult industry associations and other stakeholders in line with supplementary resolutions passed by the Legislative Yuan's Finance Committee. One of those resolutions asks the FSC to produce a plan for virtual asset derivative products within a year.

Taiwan joins a set of Asia-Pacific jurisdictions moving licensing frameworks from legislation into implementation, alongside Singapore, Hong Kong, Japan, and South Korea. For firms operating across the region, the practical work is the same in each jurisdiction: map which entity needs to hold which permission, confirm that customer asset segregation and Travel Rule data flows are in place before the deadlines, and document counterparty status as licensing lists are published.

The difference in Taiwan is only the sequencing. The rules are not final, the date is not set, and the clock has not started, which is precisely why the work is worth starting now.

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Assessing counterparty risk across APAC's transitioning licensing regimes? See how TRM helps compliance teams monitor exposure.