Virtual Asset Service Act Passes Third Reading! Taiwan's Crypto New Era Arrives, Moving Towards Comprehensive Licensing System

The Legislative Yuan Passes the Virtual Asset Service Act in Third Reading, Establishing the Financial Supervisory Commission as the Competent Authority, Fully Adopting a Licensing System for Virtual Asset Service Providers, and Creating a Dedicated Chapter for Stablecoin Regulation.

Taiwan's First Cryptocurrency-Specific Law, the "Virtual Asset Service Act," Passes Third Reading

The Legislative Yuan passed the "Virtual Asset Service Act" in its third reading today (30th), formally establishing Taiwan's first legal framework specifically governing the digital asset industry, marking a new development phase in Taiwan's virtual asset regulatory system. In the future, virtual asset service providers (VASPs) will be fully subject to a licensing system, with clear legal basis for stablecoin issuance, market order, investor protection, and industry management.

Previously, the competent authority primarily managed virtual asset businesses based on the "Money Laundering Control Act" and administrative orders. After the passage of the new law, digital assets will be formally integrated into the complete financial regulatory system, with the Financial Supervisory Commission (FSC) becoming the competent authority responsible for issuing licenses, supervision, and drafting related sub-laws. This move makes Taiwan one of the few Asian countries to complete legislation specifically for virtual assets, providing a more comprehensive legal foundation for the industry.

VASPs Adopt a Licensing System, Stablecoins Have a Dedicated Chapter

One of the most significant changes in the "Virtual Asset Service Act" is the full adoption of a licensing system for virtual asset service providers. In the future, all businesses offering virtual asset trading, custody, exchange, transfer, brokerage, and other related services must obtain approval from the FSC before operating. Unauthorized operators will face administrative sanctions, and serious cases may also involve criminal liability.

The bill also, for the first time, establishes a dedicated chapter for stablecoin regulation. Issuers must obtain approval from the competent authority and maintain sufficient reserve assets, with related assets kept separate from the company's own property to safeguard holders' rights. Management involving New Taiwan Dollar stablecoins will also fall under the central bank's supervisory scope.

Additionally, the new law requires businesses to establish robust internal controls, risk management, information disclosure, asset custody, cybersecurity, and anti-money laundering systems, while implementing client asset segregation to enhance market transparency and overall industry trust.

New Market Order Regulations Added to Strengthen Investor Protection

Beyond establishing the licensing system, the "Virtual Asset Service Act" also includes market order regulations that prohibit false trading, price manipulation, dissemination of false information, insider trading, and other acts that could undermine market fairness, along with corresponding administrative and criminal penalties to reduce market manipulation and financial fraud risks.

In recent years, Taiwan's virtual asset market has grown rapidly but has also seen multiple trading platform collapses, fraud cases, and cross-border money laundering incidents. The new law provides the competent authority with a more complete enforcement basis and raises the operating threshold for businesses, aiming to establish a sounder market order.

In the future, the FSC will gradually announce supporting sub-laws based on the parent law, including application qualifications, minimum capital requirements, information disclosure, client asset custody, risk control, and other supervisory regulations, as guidelines for industry compliance.

Taiwan's Digital Asset Market Moves Toward Institutionalized Development

The passage of the "Virtual Asset Service Act" in third reading is considered a significant milestone for Taiwan's digital asset industry, representing the official transition of the regulatory system from registration-based management to a comprehensive licensing system. In the future, exchanges, custodians, stablecoin issuers, and other digital asset service providers will all be included in a unified supervisory framework.

Market participants believe that a complete legal framework will help increase the confidence of financial institutions, listed companies, and international enterprises in participating in Taiwan's digital asset market, while also providing a clearer legal basis for security token offerings, asset tokenization (RWA), on-chain finance, and other innovative applications.

With the parent law formally enacted, the content of subsequent sub-laws, the timeline for business license applications, the transition mechanism for existing VASPs, and related stablecoin management regulations will become the most closely watched development priorities for the next phase of the industry, also affecting Taiwan's digital asset market's future competitiveness and pace of international alignment.