Virtual Asset Service Act Passes Third Reading! Three Key Points of the Regulation at a Glance, Legislator: Expected to Increase Competitiveness

Taiwan's Legislative Yuan passed the third reading of the "Virtual Asset Service Act" on June 30, 2026. The new law will fully adopt a special permit system and strictly regulate asset segregation and stablecoin issuance.

Taiwan's virtual asset industry has officially entered a new development phase. The Legislative Yuan formally passed the third reading of the "Virtual Asset Service Act" draft on June 30, 2026. This specialized law marks the end of the frontier period lacking clear regulations. In the future, Virtual Asset Service Providers (VASPs) will be placed under the high-level supervision of the Financial Supervisory Commission, establishing three core pillars: protecting the rights and interests of traders, preventing financial crime, and promoting fintech innovation.

• Related news: Virtual Asset Service Act passes third reading! Taiwan's new crypto era begins, moving towards a full permit system

Core Analysis of the Regulations: Special Permit System, Asset Segregation, and Stablecoin Legalization

The "Virtual Asset Service Act" explicitly stipulates that Virtual Asset Service Providers must be established in the form of a company limited by shares. The overall regulatory framework will completely shift from the current anti-money laundering registration system to a special permit system. The regulations provide existing operators with a sufficient transition period, clearly requiring them to submit a permit application within 12 months of the law's implementation and obtain the permit license within 21 months to continue operations.

Regarding asset security, which is of high concern to investors, the new law strictly requires that customer assets and the operator's own property be separately independent. In the event of operator bankruptcy, the customer assets under custody will not fall under the scope of the bankruptcy estate. Additionally, the specialized law establishes a legal basis for stablecoins for the first time, stipulating that issuing stablecoins requires permission from the competent authority and consultation with the central bank. Operators must set up full reserve assets, all held in trust custody, and are strictly prohibited from paying any form of interest or returns on stablecoins.

Imposing Heavy Penalties: Up to 10 Years Imprisonment and Fines up to NT$200 Million

To effectively deter market chaos and financial fraud, this legislation significantly raises the cost of illegal operations and crimes. The regulations specify:

• For engaging in false, fraudulent, or market manipulation activities in the virtual asset issuance or trading market, the penalty will be imprisonment for not less than 3 years and not more than 10 years, and a fine of not less than NT$10 million and not more than NT$200 million may be imposed concurrently.
• For operating virtual asset businesses without a permit or illegally issuing stablecoins, the maximum penalty is imprisonment for up to 7 years and a fine of up to NT$100 million. If a Virtual Asset Service Provider illegally uses customer assets, or a stablecoin issuer illegally uses reserves, the responsible person faces a maximum imprisonment of up to 5 years and a fine of up to NT$50 million may be imposed concurrently.

Legislators Lin Chu-yin and Ko Ju-chun: Holding the Line, Facing International Web3 Competition

During the third reading process of promoting the bill, several legislators involved in the review expressed their expectations for the industry's prospects. Legislator Lin Chu-yin pointed out that the passage of the specialized law establishes the core shift from a registration system to a permit system, and the heavy penalty mechanism clearly conveys Taiwan's firm stance of refusing to become a hotbed for financial crime. She emphasized that granting a legal basis for stablecoins and requiring asset segregation will open the door for cross-border remittances, corporate payments, and tokenization of real-world assets, helping Taiwan maintain an advantage in the international Web3 competitive landscape.

Image source: Legislative Yuan, Legislator Lin Chu-yin

Legislator Ko Ju-chun, who comes from a technology background, stated that the third reading signifies Taiwan entering a new era of digital finance and will synergize with the AI Basic Act. He reiterated the core spirit of the legislation: preventing fraud should not stifle innovation, and embracing innovation should not sacrifice the people's property security. Ko Ju-chun also quoted the classic blockchain maxim "Don't trust, just verify," expressing hope that a responsible digital financial industry can start from Taiwan and reach the world.

Image source: Legislative Yuan, Legislator Ko Ju-chun

Legislators Li Yen-hsiu and Lai Shyh-bao: Farewell to Conservative Supervision, Embrace the Global Fintech Wave

Legislator Li Yen-hsiu reviewed the development trajectory of virtual currencies, from Satoshi Nakamoto's release of the Bitcoin whitepaper in 2008 to the engineer purchasing two pizzas with 10,000 bitcoins in 2010. In just 16 years, virtual assets have grown into a massive emerging industry with a market capitalization of trillions of dollars. She believes that a sound regulatory system can attract more international investment and top talent, allowing Taiwan's innovative industries to develop more stably and sustainably.

Image source: Legislative Yuan, Legislator Li Yen-hsiu

Legislator Lai Shyh-bao offered sharp criticism of the past attitudes of the competent authorities. He pointed out that in the past, the Central Bank and the Financial Supervisory Commission mostly held a conservative stance of rejecting or being unwilling to get involved with virtual currencies, leading to a state of no supervision in the market. Lai emphasized that the specialized law places virtual assets under high-level supervision as a special permitted industry, brings stablecoins under financial oversight, and accelerates the substantive integration of traditional finance and crypto operators. He called on the executive branch to reverse conservative thinking and face the global wave of technology-driven financial development.

Image source: Legislative Yuan, Legislator Lai Shyh-bao