Fastest by June Third Reading! Virtual Asset Service Law passes preliminary review, key points of the preliminary version and implementation timeline at a glance

Taiwan’s first dedicated crypto law, the Virtual Assets Service Act, has passed the Legislative Yuan’s initial review, bringing the industry under a licensing-and-permit system. The bill covers stablecoin management and derivatives planning. With a third reading potentially as early as June this year, when could it be fully implemented?

Taiwan’s first dedicated crypto law! The draft Virtual Assets Service Act passes the initial review

Yesterday (6/3), the Legislative Yuan’s Finance Committee conducted a clause-by-clause review of the draft Virtual Assets Service Act. After a full day of discussion, the initial review was successfully completed—marking the first dedicated crypto law in Taiwan’s history.

This review consolidated 12 versions proposed by the Executive Yuan, the Taiwan People’s Party caucus, and cross-party legislators, and ultimately reached consensus within the committee. Financial Supervisory Commission (FSC) Chair Peng Jinlong said that going forward, regulations will be designed with differentiated supervisory frameworks and capital requirements depending on the level of business risk, to balance financial security and the development of industry innovation.

Five core focuses of the initial review version of the Virtual Assets Service Act

Based on reports from the Commercial Times, Economic Daily News, and Central News Agency, the draft approved in the initial review will upgrade the virtual asset industry from the current anti-money laundering registration system to a licensing system requiring permits.

The following is a summary of the main points of the initial review version (mobile-friendly table—swipe left or right):

| Category | Key points of the initial review version of the Virtual Assets Service Act | | --- | --- | | Licenses and Business | Regulates virtual asset service providers (VASP) to submit an application to the FSC within 12 months after the dedicated law goes into effect, and obtain the permit within 21 months. The 8 existing registered operators will have a maximum 2-year transition buffer period. Business scope includes exchange, trading platforms, transfers, custody, underwriting, and lending services. | | Stablecoin Issuance | Stablecoin issuance must apply for approval from the FSC and consult with the Central Bank. Issuers must establish and maintain full reserve assets, stored in domestic financial institutions and kept separate from the issuer’s own property, with all assets held in trust custody. In addition, stablecoin issuers may not pay any form of interest or return. | | Derivatives Planning | The Finance Committee passed a resolution requiring the FSC, within 1 year after the dedicated law is approved, to complete service-planning proposals for virtual asset derivatives (such as options and dual-currency wealth management), and to deliberate related draft regulations. | | Product Listing and Delisting | Trading platforms will adopt a filing-based approach to management in the future. VASP must complete their own product listing and delisting review before applying for a filing with the FSC. Compared with case-by-case review, this mechanism offers greater regulatory flexibility and market efficiency. | | Nine Sub-laws | After the parent law is passed, subsequent supervisory details will be filled in through nine sub-laws. These include capital amount, operating guarantee deposits, qualification requirements for practitioners, measures to block offshore platform restrictions, and management rules for various types of business. |

Virtual Assets Service Act passes initial review—cross-party legislators and FSC comments

Regarding the advancement of the draft Virtual Assets Service Act, cross-party legislators and the FSC Chair have all shared their views, summarized as follows:

• Legislator Li Yanshou: She estimates that the bill could complete the second and third readings in June, laying an institutional foundation for regulatory oversight of trading markets to support financial technology innovation, and effectively safeguarding traders’ rights and interests.
• Legislator Ge Rujun: She thanked cross-party members for their support, allowing the provisions to reach consensus clause-by-clause without the need for negotiations, and expressed hope that Taiwan will become a world digital finance center by acting early to lead others.
• Legislator Lin Siming: He cited statistics from the International Monetary Fund (IMF), noting that the global virtual asset market is already nearing $3.5 trillion. He argues that if financial institutions also operate related businesses in the future, the same supervisory standards should apply, and systems should be built for abnormal price-and-volume monitoring and for detecting unfair trading.
• Legislator Lai Huiyuan: Focusing on information transparency and risk control, she called on regulators to regularly disclose and update the list of compliant service providers and trading statistics in real time. At the same time, she supports tiered management based on business scale, and believes that regulators should be granted the authority to promptly intervene with restricting or punitive measures when operators exhibit abnormal operations.
• FSC Chair Peng Jinlong: In response to concerns raised by legislators regarding impacts on practitioner qualifications, he said qualification criteria will be set out in sub-laws. Practitioners will be given at least a 1-year adjustment period, and if necessary it can be extended by an additional 6 months to help the industry smoothly transition to the new system.

Image source: Li Yanshou’s Facebook page — the Virtual Assets Service Act passes the initial review; cross-party legislators and FSC share views

If the Virtual Assets Service Act is passed, will the full implementation take place in the first half of 2027?

According to the legislative process of the Legislative Yuan, generally speaking, after a bill completes its initial review, if it is decided that it does not need to be referred for caucus negotiations, it will be directly sent to the plenary session for the second and third readings.

During the second reading, broad discussions and clause-by-clause discussions will be conducted in sequence. After passing the second reading, the bill will, in principle, move to the third reading at the next session, where the text is revised and the full-case vote is completed. After the third reading is passed, the bill will be submitted for presidential promulgation, and the President must promulgate it within 10 days of receipt.

Image source: Taiwan Legislative Yuan legislative process

If the Virtual Assets Service Act successfully completes the third reading and is promulgated by the President, then according to the provisions approved in the initial review, the FSC must submit a planning proposal for derivatives within 1 year. The related nine sub-laws—such as the bank custody practical guidelines for encrypted currencies, which are expected to be released around late September to early October this year—as well as sub-laws including practitioner qualifications, will also be gradually finalized.

Therefore, the comprehensive licensing and supervisory system, including the sub-laws, is expected to be fully rolled out within 1 to 2 years after the law is promulgated. The earliest estimate is the first half of 2027, and the latest could be 2028, as operators’ license-application deadlines expire and the system goes fully live.

Further reading:
Want Taiwan to become a digital asset center? Legislators propose VASP tax incentives and domestic Bitcoin ETF issuance

Economic Daily News reports that “these 6 banks” may issue stablecoins first—what opportunities are there in Taiwan’s stablecoin business?

A new chapter for Taiwan’s crypto community! Octopus cards are linking up with virtual assets; Federal Bank: in the future, investment trusts may issue crypto ETFs