Sean Chen Warns Taiwan Risks Marginalization in OUSD Push

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.