Taiwan VASPs Seek Broader Insurance as Crypto Oversight Tightens

As Taiwan gradually strengthens oversight of virtual asset service providers, insurers are confronting a broader set of risks tied to trading operations, management liability, cybersecurity and custody of customer assets. Policies spanning those exposures could help VASPs absorb operational losses and meet rising regulatory expectations, while offering customers greater protection as digital-asset businesses become more integrated with the financial system.

Fubon Insurance and Hotai Insurance are developing more modular coverage that VASPs can tailor across three areas: corporate operations, management liability and customer custody interests. The insurers are also assessing whether emerging exposures involving stablecoins and real-world asset tokenization, or RWA, can be underwritten. The report did not disclose policy limits, premiums or a launch date for the upgraded products.

Taiwan’s legislature passed the Virtual Asset Service Act on June 30, 2026, and the law was promulgated on July 22, though its effective date will be set separately. The framework requires virtual asset service providers to obtain approval from the Financial Supervisory Commission and tightens rules on customer-asset segregation, cybersecurity and stablecoin reserves. The shift from anti-money-laundering registration to full licensing raises the importance of insurance as a compliance and balance-sheet safeguard.

Hotai Insurance and KGI Bank launched Digital Asset Custody Risk Insurance on March 5, covering private keys and linked assets including bitcoin, ether and stablecoins. Protection applies to losses involving hacking, employee dishonesty, theft and certain physical disasters. On May 26, Fubon Insurance unveiled a combined digital-asset professional liability and crime policy for Modern Wealth Technology, part of MaiCoin Group, covering third-party claims and losses from fraud, insider misconduct and stolen assets. The companies did not disclose premiums or coverage limits.

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.