Taiwan Passes Its First Dedicated Crypto Law

Taiwan is moving beyond an anti-money laundering registration regime toward a dedicated legal framework for virtual assets. The proposed Virtual Asset Service Act would establish clearer requirements for market entry, corporate governance and risk controls for virtual asset service providers, while bringing stablecoin issuance under formal oversight. The framework is important for investor protection and for giving the industry greater regulatory certainty as the domestic digital-asset market develops.

The Financial Supervisory Commission is drafting nine sets of regulations authorized under the proposed law, covering VASP establishment standards, internal controls and a dual-review system for stablecoin issuers. The main act and its implementing rules could be promulgated and take effect together as early as the first quarter of 2027. Existing firms that have completed anti-money laundering registration are expected to receive a transition period of up to about two years to obtain new licenses.

Taiwan’s legislature has passed the Virtual Asset Service Act on its third reading, setting the stage for the crypto industry to move into a licensing-based regulatory era. The legislation raises the importance of institutional-grade custody, risk controls and compliance for market participants, while testing whether Taiwan can develop the infrastructure needed to capture growing demand for regulated digital-asset financial services.

Following the bill’s passage, Taiwan blockchain venture-capital firm Hunglou Capital is working with global crypto custodian BitGo on a series of forums aimed at helping local financial institutions understand digital-asset custody and compliance frameworks. BitGo, which has operated in custody for 13 years, and Hunglou Capital also discussed in a recent interview how Taiwan could connect its financial sector with global crypto markets.

Taiwan’s passage of the Virtual Asset Service Act marks a shift toward a dedicated legal framework for the crypto sector. Former Premier Chen Chong said stablecoins should not be treated merely as financial products because they touch payment systems, foreign-exchange management, financial stability and national security. He argued that policy should be coordinated at the highest levels of government rather than left to a single regulator.

Chen said the law’s effectiveness will depend on sustained attention from senior officials and clear cross-agency coordination. He warned that overlapping oversight by the Financial Supervisory Commission and the Central Bank of the Republic of China (Taiwan) could create regulatory gaps if their review powers are not clearly divided. The government should define responsibility for stablecoin issuance, payments and risk controls as it implements the new regime, he said.

Taiwan had largely supervised virtual asset service providers, or VASPs, through anti-money laundering registration, leaving trading, custody and stablecoin activities without a comprehensive statutory framework. The Virtual Asset Service Act replaces that approach with prior licensing by the Financial Supervisory Commission, requires the segregation of client assets and mandates fully backed reserve assets for stablecoins, strengthening investor protection as digital-asset businesses become more closely integrated with the financial system.

The Legislative Yuan passed the act on June 30, 2026, with its effective date to be set by the Executive Yuan. Existing operators must apply within 12 months of implementation and secure approval within 21 months. Hotai Insurance introduced custody-risk coverage with KGI Bank on March 5, while Fubon Insurance on May 26 underwrote professional liability and crime policies for MaiCoin parent Modernity Financial Technologies. The products address private-key losses, hacking and employee fraud; insured amounts were not disclosed.

Taiwan currently regulates virtual asset service providers (VASPs) through anti-money laundering registration, but most of the world's 10 largest exchanges have yet to register legally in Taiwan, leaving gaps in oversight and fraud prevention. The Financial Supervisory Commission (FSC) is advancing a Virtual Asset Service Act that would establish comprehensive rules covering investor protection, asset custody and operators' responsibilities.

The Legislative Yuan's Finance Committee recently approved the draft at its initial review. FSC Chairperson Thomas Huang said overseas VASPs would have to establish a branch company or branch office in Taiwan through one of two pathways to come under local supervision. Virtual asset derivatives would be restricted to eligible investors, with leverage caps set by the FSC. The commission also plans to finalize custody guidelines within six months after the law takes effect.