Taiwan Passes Virtual Asset Services Act, Paving Way for Stablecoin Growth
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.
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The history behind this eventSean Chen Warns Taiwan Risks Missing Global Stablecoin Push
Stablecoins backed by fiat currency or liquid reserves are emerging as infrastructure for cross-border payments and supply-chain finance, while raising questions over monetary sovereignty, reserve safeguards and financial stability. Former Taiwan premier Sean Chen, now chairman of the New Generation Financial Foundation, says Taiwan must clearly define the roles of the Financial Supervisory Commission and the central bank and establish a coherent legal framework for stablecoin issuance and oversight.
Taiwan’s legislature passed the Virtual Asset Service Act on June 30, 2026, the same day Open Standard unveiled Open USD, or OUSD. The initiative says more than 140 companies — including Visa, Mastercard, Stripe, BlackRock and Coinbase — have signed up, with fee-free minting and redemption and a launch planned by year-end. Chen said the roster includes no Taiwanese companies and warned that delayed regulation and continued absence from global crypto-finance alliances could leave Taiwan’s technology and financial sectors increasingly marginalized.
Taiwan’s Virtual Asset Service Act Advances Stablecoin Compliance as State-Owned Banks Weigh Cross-Border Payments
Stablecoins maintain their value through backing by fiat currencies or low-risk assets and can support round-the-clock cross-border remittances, payment clearing and digital-asset custody. But inadequate rules governing reserve assets, redemptions and anti-money laundering controls could threaten financial stability. Taiwan has therefore placed oversight jointly in the hands of the Financial Supervisory Commission and the central bank, while aligning its framework with regimes including the European Union’s MiCA.
The Executive Yuan approved the draft on April 2, 2026, and the Legislative Yuan passed it on its third reading on June 30. The law requires issuers to obtain permission from the Financial Supervisory Commission and approval from the central bank, maintain reserves equal to 100% of issuance and place them in trust. Nine supporting regulations could take effect together as early as the first quarter of 2027. First Bank is evaluating the introduction of related services, while Hua Nan Bank plans to participate in a payment-clearing pilot. No issuance amount has been disclosed.
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