Taiwan's Virtual Asset Service Law draft passes the Legislative Yuan committee review, rushing through second and third readings, with the earliest implementation next year.

Taiwan’s first “Virtual Asset Service Provider Act” completed its article-by-article review in the Legislative Yuan’s Finance Committee on June 3, winning cross-party consensus. There is no need for negotiations between the ruling and opposition parties, and it will then be submitted directly to the plenary session. The bill covers areas including VASP licensing, stablecoin issuance, segregation of customer assets, and anti-fraud measures. Previously, Financial Supervisory Commission Chair Peng Jinlong said that after the third reading, at least 6 months are needed to complete the drafting of 9 sets of sub-regulations, with the fastest timeline for full implementation in the first half of 2027.
(Background: The Taiwan Stock Exchange has released two key guidelines—“Accounting Treatment for Stablecoin Trading” and “Internal Control System for Holding Cryptocurrencies”)
(Background update: HzBit Hong Zhu Digital announced “immediate cessation of operations”! Only 8 Taiwan VASP operators remain)

Key takeaways

• Taiwan’s first “Virtual Asset Service Provider Act,” with 56 articles, passed committee review; cross-party consensus achieved without negotiations
• Financial institutions may also operate as VASPs; stablecoin issuance requires FSC approval and consultation with the central bank; legislators asked the FSC to develop regulations to govern derivatives
• After the third reading, at least 6 months are needed to complete 9 sets of sub-regulations; the current 8 operators will have an 18-month transition period for license conversion

Three years ago, the collapse of FTX caused more than 300,000 investors in Taiwan to lose about NT$60 billion, creating legislative momentum for this special law. On June 3, under the chairmanship of Lee Yen-hsiu, the Legislative Yuan’s Finance Committee completed the article-by-article review of all 56 articles of the “Virtual Asset Service Provider Act.” Cross-party committee members participating in the discussion included Kuomintang lawmakers Lai Shih-bao and Ko Ru-chun, Democratic Progressive Party lawmakers Chung Chia-pin and Lin Chu-yin, as well as members from the Taiwan People’s Party caucus versions; ultimately, all provisions reached consensus and were passed without the need for negotiations between the ruling and opposition parties.

On April 2 this year, the Executive Yuan formally submitted the draft, listing it as a priority bill for this legislative session, with the goal of completing the third reading during this session (roughly through July).

Banks can also operate VASPs; derivatives to catch up within a year

The bill is divided into 9 chapters. Its core framework includes VASP classification and licensing (Articles 6 to 12), common management standards (Articles 13 to 23), stablecoin supervision (Articles 34 to 41), and penalties (Articles 47 to 54, with the heaviest penalties for fraud and manipulation of up to 10 years and a fine of NT$200 million).

Article 6 defines seven major business categories: virtual asset exchange, operation of trading platforms, transfer services, custody, underwriting, lending, and other businesses approved by the competent authority. Article 7 also allows financial institutions, upon obtaining permission, to engage in virtual asset businesses without establishing a subsidiary; they may directly apply for VASP status using their existing banking licenses.

During the review, legislator Ko Ru-chun requested that within one year after the law takes effect, the FSC complete the draft management measures for virtual asset derivative products, and conduct rolling reviews every six months. New types of services such as perpetual contracts, copy trading, delegated trading/management, and options would be gradually brought under regulation. Regarding platform listing and delisting reviews, this review process will be explicitly defined in the sub-regulations, with a principle of 15 days.

For stablecoins, Articles 34 to 36 of the draft provide that issuance must be approved by the FSC and coordinated with the central bank. Issuers must maintain equivalent and adequate reserve assets, provide independent custody, and undergo regular audits; paying interest to holders is prohibited. Offshore stablecoins (such as USDT and USDC) must also obtain approval in order to be traded in Taiwan.

Pushing for passage in the current session’s third reading; existing 8 operators must obtain licenses

After completion of the committee review, the bill will be sent directly to the plenary session for the second and third readings. Lee Yen-hsiu has clearly stated the goal is to complete the third reading within the current session. Previously, FSC Chair Peng Jinlong said that even after the third reading, at least 6 months are still required to complete the 9 sets of sub-regulations (8 VASP supervision sub-regulations and 1 stablecoin special law), with full implementation estimated to be the fastest in the first half of 2027.

For existing operators, the bill includes transitional provisions: within 9 months after enforcement, applications must be submitted; within 18 months, formal licenses must be obtained. Currently, only 8 VASPs in Taiwan have completed anti-money-laundering registration (MaiCoin, BitoGroup, XREX, He Ya, Fusheng, Cross-chain, Tuohuang, and Zhongliang), a sharp reduction from about 26 operators in early 2024.

For financial institutions, Federal Bank has invested approximately US$27.8 million to acquire nearly 10% equity in the parent company of MaiCoin Group; KGI/CTBC has invested in XREX; Fubon Financial Group has launched the TWEX exchange through Fusheng Digital; and at least four financial holding companies are actively discussing VASP mergers and acquisitions.

Legislator Ko Ru-chun emphasized that the FSC must promote the establishment of a “Financial Technology Innovation Development Fund,” to be used for subsidizing financial technology R&D, cybersecurity resilience, and talent cultivation.

Even after the bill passes and goes into effect, there will still be at least another half year. During this interim period, the 8 operators need to prepare to obtain licenses, and new entrants need to weigh compliance costs. Those who move first may not necessarily arrive first, but those who are unprepared will definitely find it very difficult to proceed.

Frequently Asked Questions

When will Taiwan’s Virtual Asset Service Provider Act officially take effect?

The bill aims to complete the third reading by approximately July during this session, but at least 6 months are still needed after the third reading to complete the drafting of the 9 sets of sub-regulations; the fastest timeline for full implementation is the first half of 2027. Existing VASP operators will have an 18-month transition period to obtain formal licenses.

How many legally compliant virtual asset businesses are currently in Taiwan?

A total of 8 VASPs have completed anti-money-laundering registration, including MaiCoin, BitoGroup, XREX, He Ya, Fusheng, Cross-chain, Tuohuang, and Weight Technology. This is a significant reduction from about 26 prior to the implementation of the regulations.