Sean Chen Warns Taiwan Risks Missing Global Stablecoin Push

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’s Legislative Yuan has passed the Virtual Asset Services Act on its third reading, replacing the virtual asset market’s anti-money-laundering registration regime with a licensing system overseen by the Financial Supervisory Commission. For the first time, the legislation establishes a clear legal framework for stablecoin issuance, requiring issuers to maintain reserves on a one-to-one basis and place them in trust. The law is expected to substantially improve market transparency and investor protection. It also lays a crucial legal foundation for traditional banks to enter on-chain finance and assess the potential of cross-border payments.

The Legislative Yuan passed the law on June 30, 2026, and it could take effect as early as the first quarter of 2027. Stablecoin issuers will need approval from the Financial Supervisory Commission, which must consult the central bank. The development is prompting traditional banks that have piloted custody services, including CTBC Bank, KGI Bank and Union Bank of Taiwan, to accelerate plans for fully reserved stablecoins and cross-border settlement services. Existing operators must apply within 12 months of the law taking effect and obtain a license within 21 months.