Are there as many as five versions of the Virtual Asset Service Bill draft? Financial Supervisory Commission report: Stablecoin reserves and interest are the key points

The Chairman of the Financial Supervisory Commission, Peng Jinlong, attended a report at the Legislative Yuan and emphasized that virtual asset regulation will shift from a registration system to a licensing system. The draft special law includes a dedicated chapter on stablecoins, requiring full reserves and prohibiting interest payments.

The FSC promotes a transition to a licensing system, establishing a comprehensive supervision framework for VASPs

Chairman Peng Jinlong of the Financial Supervisory Commission (FSC) visited the Legislative Yuan Finance Committee today (5/7) to deliver a special report on “Development and Outlook of Financial Technology Business.” The report pointed out that, as emerging technologies evolve rapidly, fintech has become a key factor in strengthening industry competitiveness. The FSC’s current policy focus is on implementing financial and operational supervision of Virtual Asset Service Providers (VASPs).

According to the draft Virtual Asset Service Law reviewed and submitted to the Legislative Yuan by the Executive Yuan in April 2025, Taiwan’s virtual asset regulation is entering a milestone transformation, officially shifting from the previous “Anti-Money Laundering Registration System” to a more stringent “Licensing System.”

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This system transition includes clear transitional provisions. Businesses that have completed AML registration before the new law’s enforcement must apply for a license within nine months after the law takes effect, and obtain the license within 15 months. Failure to complete the transition by the deadline will prohibit continued operation of related businesses.

The FSC emphasizes that this adjustment is essentially aimed at establishing a regular communication mechanism between the financial industry and VASP operators, ensuring that virtual assets can develop innovatively while managing risks and protecting consumer rights.

Peng Jinlong stated that the FSC is actively creating a friendly development environment and will further enhance Taiwan’s financial market innovation through public-private collaboration.

Legislative race under bipartisan consensus, analysis of four major draft versions

Currently, besides the Executive Yuan version, the Legislative Yuan has four other draft versions proposed by different party caucuses and members, demonstrating a high level of bipartisan consensus on establishing industry standards. The Taiwan People’s Party caucus, DPP member Lin Chuyin, KMT members Lin Siming and Ge Rujun have each drafted a version of the Virtual Asset Service Law.

Image source: Legislative Yuan Finance Committee Besides the Executive Yuan version, there are four other draft versions proposed by different party caucuses and members

The Taiwan People’s Party emphasizes that the virtual asset market valuation approached nearly $2.5 trillion USD in January 2022. Despite major shocks such as the Terra Luna collapse and FTX bankruptcy, the market size remained above $1 trillion USD. Therefore, establishing a comprehensive regulatory system to protect traders’ rights is urgent.

Versions proposed by Ge Rujun and Lin Chuyin broadly reference international legislative trends from the EU (MiCA), Japan, South Korea, and Hong Kong, regulating the diverse nature of virtual assets. Ge Rujun’s version particularly focuses on the impact of virtual assets on traditional finance and the real economy, including cross-border payments, lending, and supply chain finance applications.

Regarding administrative sanctions, all versions propose strict penalties, with violations of mandatory or prohibited regulations punishable by fines up to NT$6 million, and requiring rectification within a set period. Failure to rectify on time can result in additional penalties. This rigorous legal design aims to boost public trust in the virtual asset market and ensure legal and financial order stability.

Stablecoin regulation chapter as a highlight, strict reserve and interest rules

In the draft law, “Stablecoin Issuance and Management” is listed as a separate chapter, reflecting the regulator’s high concern for the risks associated with such assets. The FSC explicitly states that issuing stablecoins within Taiwan must be licensed. Issuers are required to maintain full reserves and issue and redeem at face value. To prevent stablecoins from being mistaken for traditional bank deposits and to avoid speculation risks, the draft specifies that stablecoin issuers cannot pay interest to holders. Additionally, operators must establish strict internal controls, internal audits, and cybersecurity management systems, and regularly report and disclose relevant financial and operational information to ensure transparency.

The draft’s reserve requirement for stablecoin issuance includes a strong deterrent mechanism. If issuers fail to deposit sufficient reserves, the central bank will charge interest on the shortfall at the minimum interbank rate plus 5% annually. In serious cases, administrative fines ranging from NT$300k to NT$6 million may be imposed. This supervision framework, combining financial stability and cybersecurity resilience, aims to ensure the steady development of stablecoins in Taiwan. The FSC also states that after the law is enacted, relevant delegated regulations will be drafted to officially open applications for stablecoin issuance.

Asset tokenization and AI leading future, continuous fintech innovation

In addition to legal frameworks, the FSC is actively promoting asset tokenization (RWA) experiments, focusing on bonds and gold as initial targets. Using blockchain technology to convert physical assets into digital certificates can enhance liquidity and reduce transaction and settlement complexity.

Furthermore, the FSC is actively promoting the “Hidden Light Project,” launched in March 2025, which has already visited 15 financial and tech startups to help clarify regulatory challenges in innovation experiments and business pilots, and to identify promising innovative projects. This initiative complements the 2025 “Inclusive Finance” proposal competition, jointly advancing digital financial innovation.

On the technological front, the FSC is also exploring the development of proxy AI and programmable AI. To guide financial institutions in appropriately applying AI, the FSC is promoting the “Programmable AI Governance Project,” studying domestic and international regulations, identifying applicable financial scenarios, and establishing quantifiable risk assessment indicators.

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The report concludes by mentioning that the “2025 Taipei FinTech Forum” held in October 2025 attracted participation from experts from eight countries, with nearly 1,000 attendees in person. Through international exchanges and technological integration, Taiwan aims to build a digital financial ecosystem that combines innovation and resilience in the global fintech wave.