Taiwan Bitcoin ETF approval to be announced in June! Legislators worry that high capital requirements for VASPs may cause small players to resist against whales

The Financial Supervisory Commission Chair Peng Jinlong promised to clarify the Bitcoin ETF discussion results by the end of June and plans to prioritize opening bonds and gold for RWA tokenization experiments. The government is committed to improving a dedicated legal framework for virtual assets.

Bitcoin ETF review enters deep waters; FSC promises to show results by the end of June

The Legislative Yuan Finance Committee held a meeting on May 7, 2026, engaging in intense questioning on virtual asset regulation and digital financial development. Kuomintang legislator Ge Rujun was the first to raise concerns, pointing out that global digital assets are rapidly converging in Taiwan, and the push for Bitcoin ($BTC) ETFs has become an irreversible trend.

Image source: Legislative Yuan Finance Committee Kuomintang legislator Ge Rujun questions FSC Chair Peng Jinlong on Bitcoin ETF issues

Ge Rujun mentioned that recently, international financial giants like Morgan Stanley have joined the competition for Bitcoin spot ETFs, indicating that traditional finance’s embrace of digital assets is becoming increasingly formalized. He further revealed that he has forwarded a research report titled “Bitcoin as Reserve Asset,” drafted by staff of U.S. Senate members, which details the pros and cons of including Bitcoin in national reserves and legal recommendations.

• Related news: Bitcoin ETF attracts $100 million in first week! Morgan Stanley executive: Cryptocurrency has entered the core of the company

In response, FSC Chair Peng Jinlong said he has read the report and understands its discussion of the multiple advantages of considering Bitcoin as a reserve asset. Regarding the market’s most concerned issue—the progress of Bitcoin ETF approval—Peng Jinlong admitted that the securities association’s semiannual reports on implementation results and analysis have already been submitted to the FSC, and internal discussions are ongoing.

Facing Ge Rujun’s inquiry about a clear policy timetable, Peng Jinlong promised to conduct rolling reviews every six months, with an expectation to explain the feasibility and discussion results of Bitcoin ETFs to the public before the end of June 2026.

Ge Rujun emphasized that countries worldwide are competing for the position of digital asset management center. If Taiwan can establish a complete legal framework early, it will help attract global capital and prevent continued outflow of funds interested in such products.

RWA tokenization opens new asset management horizons, with bonds and gold as early indicators

Besides ETFs, the tokenization of real-world assets (RWA) became another major focus of the day’s questioning. Legislators from the Democratic Progressive Party, Zhong Jiapin and Ge Rujun, both expressed high concern.

Ge Rujun cited the latest developments from the Depository Trust & Clearing Corporation (DTCC) in the U.S., noting that the organization has received SEC approval to fully tokenize assets worth up to $114 trillion. This groundbreaking move, which shocks global financial markets, is seen as a significant milestone in pushing asset values toward digitalization. Zhong Jiapin, from the perspective of “century trusts” and “asset inheritance,” asked how the FSC can leverage asset tokenization to retain Taiwan’s private wealth and attract overseas assets back.

• Related news: 50 financial giants gather! U.S. DTCC authorized by SEC to push RWA tokenization worldwide

Peng Jinlong stated that the FSC is actively promoting the Asia-Pacific asset management hub, with RWA being a key future application scenario. Currently, the plan is to adopt a trial approach, initially opening “bonds” and “gold” for tokenization. Peng explained that these two assets were chosen first because they are easier to value. Compared to funds with complex account structures, bonds and U.S. Treasuries are less difficult to tokenize initially.

Zhong Jiapin then suggested including securities and real estate investment trusts (REITs) into the scope of RWA, believing this would enrich tokenization options and facilitate public infrastructure funding. Peng was open to this idea, stating that the essence of RWA is that any asset can be tokenized. Future plans will reference international trends to gradually expand the scope, including REITs in the development blueprint.

Image source: Legislative Yuan Finance Committee Democratic Progressive Party legislator Zhong Jiapin immediately suggests including securities and REITs into RWA scope

Learning from Japan and the U.S. stablecoin regulatory frameworks to promote linking virtual assets with fiat currency

Regarding the integration of virtual assets with the physical financial system, Ge Rujun shared Japan’s successful experience in digital finance. He pointed out that Japan adopts a decentralized regulatory model, where experienced financial institutions handle issuance and underwriting of virtual assets, with trust banks responsible for holding 1:1 fiat currency reserves to issue stablecoins. These are then circulated and traded by regulated Virtual Asset Service Providers (VASPs), ensuring legal listing and settlement of stablecoins on platforms. Ge Rujun believes this win-win model allows traditional banks and startups to share profits, serving as an important reference for Taiwan’s drafting of VASP-related sub-laws.

Additionally, Ge Rujun mentioned the progress of the U.S. “CLARITY Act,” especially regarding the controversy over whether stablecoins can generate yield. The U.S. has proposed a compromise: passive interest earning may be restricted, but if users engage in specific active activities and rewards, compliance is possible.

Peng Jinlong responded that the FSC is closely monitoring international regulatory developments, including new regulations expected to be announced in June and July.

Regarding the enforcement direction for the NT dollar stablecoin, the FSC plans to strengthen communication with industry to ensure that promising VASPs are included in issuance systems during the drafting and enforcement of the special law, connecting virtual and physical currencies, and preventing Taiwan from falling behind in international competition.

The draft of the VASP law has attracted attention—how to balance regulatory risks and innovation

Democratic Progressive Party legislator Lin Chuyin focused on the upcoming “Virtual Asset Service Law” draft. She pointed out that Taiwan’s local VASP operators have shrunk from a peak of 26 to currently 8, indicating that small and medium startups are gradually exiting the market.

Image source: Legislative Yuan Finance Committee Democratic Progressive Party legislator Lin Chuyin worries that if the capital threshold set by the future law is too high or compliance costs increase significantly, the market will face a “little fish unable to compete with big whales.”

Lin Chuyin expressed concern that if the future law’s capital requirements are too high or compliance costs increase substantially, only large traditional financial institutions will survive, leading to a “little fish unable to compete with big whales” scenario. She cited data showing that the EU’s asset requirement for low-risk operators is about NT$1.84 million, Hong Kong’s ranges from NT$20 million to NT$40 million, and the U.S. about NT$15 million, urging the FSC to consider industry diversity alongside regulation.

In response to legislators’ worries about startups’ survival space, Peng Jinlong explained that future regulatory frameworks will follow a risk-based approach (Risk-Based Capital, RBC). He emphasized that capital requirements are meant to protect traders and investors; higher risks naturally require higher capital buffers.

Peng Jinlong promised that when drafting enforcement rules, he will refer to international standards for actual capital requirements and ensure transparency. He believes that market competition is free, and capable operators will survive under regulations. The policy will not provide long-term protection to specific players but aims to establish a fair and internationally competitive digital financial environment.

All three legislators finally urged the FSC to rigorously supervise while leveraging Taiwan’s status as a tech giant, turning the virtual asset industry into a new engine for Taiwan’s financial progress.

Further reading
Are there five versions of the virtual asset service law draft? FSC report: stablecoin reserves and interest are key