Taiwan Enacts New Law Regulating Cryptocurrency Services

Taiwan's Comprehensive Crypto Regulation

On July 1, 2026, lawmakers in Taiwan's Legislative Yuan approved the Virtual Asset Service Act, a significant legislative move aimed at regulating the cryptocurrency sector. This new law requires all virtual asset service providers, including cryptocurrency exchanges, to secure licenses from the Financial Supervisory Commission (FSC) before operating legally in the country.

The legislation establishes more rigorous operational, governance, and custody standards. It mandates improvements in cybersecurity protections and requires companies to keep customer funds separate from corporate assets. Moreover, it imposes substantial penalties for non-compliance, including prison sentences of up to seven years for unauthorized operations, and fines reaching NT$100 million (approximately $3.14 million).

Key Elements of the New Law

• Compliance: All virtual asset service providers must obtain explicit licensing from the FSC.
• Grace Period: Existing businesses registered for anti-money laundering compliance will have a 12-month grace period to apply for licenses and a maximum of 21 months to secure full approval.
• Stablecoin Regulation: Providers of stablecoins must maintain full asset reserves and secure approvals from both the central bank and the FSC.
• Severe Penalties: Violating the law can result in prison terms and hefty fines, with market manipulation offenses facing even harsher penalties.

Context and Implications

This legislative action marks a shift from basic anti-money laundering oversight to comprehensive regulatory supervision of the cryptocurrency industry in Taiwan. The law positions Taiwan as a more controlled environment for digital assets, aiming to enhance consumer protection and reduce the risk of financial crime.

"This new framework establishes a clear set of guidelines and responsibilities for cryptocurrency operations, reinforcing our commitment to a secure and regulated market," said an unnamed official involved in the legislative process.

Future Outlook

As the law awaits the President's signature, which is expected within ten days, the Executive Yuan will subsequently announce an official start date for the regulations. Stakeholders in the crypto sector will need to prepare for these changes, particularly those involved in stablecoin operations, as Taiwan increases its regulatory scrutiny over digital financial services.