Taiwan has approved one of its most comprehensive cryptocurrency laws to date, introducing mandatory licensing for crypto businesses, 100% reserve requirements for stablecoin issuers, and prison terms of up to seven years for unlicensed operators.
The new Virtual Asset Service Act, passed by lawmakers on Tuesday, is expected to be signed by President Lai Ching-te within the next 10 days before taking effect on a date set by the Executive Yuan.
The legislation significantly strengthens oversight of the country’s digital asset sector and aims to improve investor protection while supporting the industry’s long-term development.
Under the new law, every virtual asset service provider, including cryptocurrency exchanges and trading platforms, must obtain a license from Taiwan’s Financial Supervisory Commission (FSC) before operating legally in the country. This marks a major shift from the previous framework, which largely focused on anti-money laundering registration.
The legislation also introduces stricter requirements for cybersecurity, corporate governance, internal risk management and the protection of customer assets. Crypto firms must keep customer funds separate from company assets, reducing the risk of losses in the event of financial difficulties.
Existing businesses already registered under Taiwan’s anti-money laundering rules will be given a 12-month period to apply for licenses and up to 21 months to secure full regulatory approval.
Stablecoin issuers face even stricter standards. Companies wishing to issue stablecoins must first receive approval from both the FSC and Taiwan’s central bank. They will also be required to maintain 100% reserves backing every stablecoin in circulation, ensuring customers can redeem their holdings at any time.
The law also introduces severe penalties for violations. Operating an unlicensed crypto platform or stablecoin business could lead to up to seven years in prison and fines of NT$100 million (about $3.14 million).
Market manipulation, fraud and other serious offences carry even harsher punishments, including prison terms of three to ten years and fines of up to NT$200 million.
Taiwan’s latest legislation reflects a broader global trend as governments move to establish clearer rules for digital assets. By combining strong investor safeguards with a formal licensing regime, the country hopes to encourage responsible innovation while reducing financial crime and improving confidence in the crypto industry.
JUST IN: 🇹🇼 Taiwan’s legislature passes law establishing a regulatory framework for the Bitcoin and crypto industry.
“We’re officially entering a new era of digital finance.” 🚀
— Bitcoin Magazine (@BitcoinMagazine) July 1, 2026
Source: fsc.gov.tw
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