3rd July, 2026
By Shubhii Verma
Mandatory Licensing for Crypto Exchanges and Service Providers
Taiwan has long been a laggard when it came to crypto regulations. It was far behind compared to regional peers such as Hong Kong and Singapore when it came to drafting crypto regulations. But not anymore.
Taiwan has passed a landmark law aimed at strengthening oversight of its cryptocurrency industry, introducing one of the country’s most comprehensive regulatory frameworks for digital assets. The Virtual Asset Service Act was approved by lawmakers in the Legislative Yuan and has now been sent to President Lai Ching-te for final approval. The legislation is expected to be signed within the coming days, after which the Executive Yuan will announce its implementation date.
The new law requires all virtual asset service providers (VASPs), including cryptocurrency exchanges, trading platforms, and other digital asset businesses, to obtain licenses from Taiwan’s Financial Supervisory Commission (FSC) before they can legally operate. The move marks a significant shift from the previous regulatory framework, under which crypto firms were only required to comply with anti-money laundering (AML) registration requirements.
In addition to licensing, the legislation introduces stricter standards for cybersecurity, customer asset protection, and corporate governance. Crypto firms will be required to maintain stronger internal risk management systems and keep customer funds separate from company assets to improve transparency and safeguard investors.
Existing crypto businesses that are already registered under Taiwan’s AML regulations will be given a transition period to comply with the new requirements. These companies will have 12 months to submit their license applications and up to 21 months to receive full approval from the FSC and obtain any additional permits required under the new framework.
Stricter Regulations for Stablecoins and Investor Protection
The law also places tighter controls on stablecoin issuers. Companies planning to issue stablecoins must receive approval from both Taiwan’s central bank and the Financial Supervisory Commission before launching their products. They will also be required to maintain 100% reserve backing for all issued stablecoins, ensuring that every token is fully supported by corresponding assets. The stricter requirements reflect growing global concerns about the risks associated with stablecoins, particularly those pegged to foreign currencies.
Severe Penalties and Compliance Timelines for Crypto Firms
Taiwan’s new legislation also includes severe penalties for violations. Businesses operating crypto exchanges or stablecoin services without the necessary licenses could face prison sentences of up to seven years and fines of up to NT$100 million (approximately $3.14 million). Meanwhile, offenses involving market manipulation, fraud, or other illegal trading activities carry even harsher punishments, including prison terms ranging from three to ten years and fines of up to NT$200 million.
The new framework is expected to enhance investor protection, improve market transparency, and position Taiwan as one of Asia’s more tightly regulated cryptocurrency markets while encouraging responsible innovation within the digital asset industry.
