Taiwan Passes Virtual Asset Service Act, Requiring Crypto Firms to Obtain FSC Licenses

• Taiwan’s Legislative Yuan approved the Virtual Asset Service Act during its third reading.
• All crypto service providers must obtain a license from the Financial Supervisory Commission (FSC) before operating.
• Existing AML-registered firms have up to 21 months to secure full regulatory approval.
• Stablecoin issuers must obtain approval from both the central bank and the FSC while maintaining 100% reserve backing.
• Unauthorized operations could face prison terms of up to seven years and fines of up to NT$100 million.

Taiwan Approves Comprehensive Crypto Regulatory Framework

Taiwan has taken a major step toward regulating its digital asset industry after lawmakers approved the Virtual Asset Service Act during its third reading in the Legislative Yuan on Tuesday. The legislation has been forwarded to President Lai Ching-te for formal signing, which is expected within the next 10 days. Once signed, the Executive Yuan will determine the law’s effective date.

The legislation establishes Taiwan’s first comprehensive licensing regime for virtual asset service providers (VASPs). Under the new framework, cryptocurrency exchanges, trading platforms, and other digital asset businesses must receive explicit approval from the Financial Supervisory Commission (FSC) before they can legally operate in the country.

The move significantly expands Taiwan’s crypto oversight. Until now, crypto businesses were primarily required to register under the country’s anti-money laundering (AML) framework. The new law adds licensing requirements alongside stricter standards for cybersecurity, customer asset segregation, internal governance, and risk management.

Transition Period for Existing Firms

Companies already registered for AML compliance will receive a 12-month grace period to submit their FSC license applications and up to 21 months in total to obtain full regulatory approval and any additional required permits.

The phased transition is intended to allow existing operators to comply with the expanded regulatory framework while continuing preparations for full licensing.

Stablecoin Rules and Stronger Penalties

The Act introduces additional requirements for stablecoin businesses. Issuers must obtain approval from both Taiwan’s central bank and the FSC before operating and are required to maintain 100% reserve backing for issued stablecoins.

The legislation also establishes tougher enforcement measures. Operating a cryptocurrency platform or stablecoin business without authorization could result in prison sentences of up to seven years and fines of up to NT$100 million (approximately $3.14 million).

Market manipulation and other fraudulent activities carry even stricter penalties, with offenders facing prison terms ranging from three to ten years and fines between NT$10 million and NT$200 million.

The law marks Taiwan’s latest step toward establishing a comprehensive regulatory framework for digital assets, with implementation now awaiting presidential approval and the Executive Yuan’s announcement of the official commencement date.

Asia has accelerated its cryptocurrency regulatory efforts in recent months. In April 2026, Pakistan allowed licensed Virtual Asset Service Providers (VASPs) to open bank accounts, while South Korea confirmed in May 2026 that its crypto tax will take effect from January 2027. Taiwan has now advanced this regional trend by approving the Virtual Asset Service Act, introducing mandatory licensing, stricter stablecoin rules, and enhanced oversight for digital asset businesses.