Taiwan Crypto Law Spurs Hunglou Capital-BitGo Compliance Push

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.

Taiwan previously regulated the crypto industry primarily through a registration regime under the Money Laundering Control Act, without comprehensive sector-specific legislation. As the virtual-asset market has expanded and fraud cases have proliferated, the Legislative Yuan passed Taiwan’s first dedicated crypto statute, the Virtual Asset Service Act, on its third reading. The law places virtual asset service providers, or VASPs, under a licensing regime. It marks a major milestone for Taiwan’s fintech framework, with implications for both Web3 development and market integrity.

The legislation could formally take effect as early as the first quarter of 2027, and eight Taiwanese VASPs are already preparing to apply for new licenses. The Financial Supervisory Commission’s Banking Bureau said the law would impose three hurdles for stablecoin issuance and introduce heavier penalties for operating without a license or engaging in fraud or market manipulation. Violators could face up to 10 years in prison. Regulators are also encouraging companies including CTBC and Taiwan Mobile to explore stablecoin applications.