Taiwan passes national cryptocurrency licensing framework

Taiwan has passed a sweeping law to regulate cryptocurrency platforms and stablecoin issuers, introducing a formal licensing system and stricter oversight across the sector.

New licensing regime takes shape

The legislature approved the Virtual Asset Service Act in its third reading, requiring all digital asset firms to obtain licenses from the Financial Supervisory Commission before operating. President Lai Ching-te is expected to sign the law within ten days, after which implementation timing will be set.

The legislation replaces Taiwan’s previous anti-money laundering registration system with a comprehensive regulatory framework. It introduces mandatory standards for cybersecurity, segregation of client funds, and internal risk controls, marking a shift toward tighter supervision of digital asset activities.

Transition period for existing firms

Crypto businesses that have already completed AML registration will be given a transition period to comply with the new rules. Firms will have 12 months to apply for a license and up to 21 months to secure full approval.

This transition is expected to reshape the market as not all platforms may meet the higher compliance standards. Market participants are likely to closely monitor which companies commit to the licensing process, as this may signal their ability to continue operating in Taiwan.

Stablecoin rules tightened

The law introduces specific requirements for stablecoin issuers, including mandatory approval from both the Financial Supervisory Commission and Taiwan’s central bank. Issuers must also maintain full reserve backing held in regulated financial institutions.

Foreign-issued stablecoins will face additional scrutiny, as they must receive regulatory approval before being listed on licensed local platforms. This could affect the range of available assets in Taiwan’s crypto market.

Criminal penalties introduced

Authorities have established strict penalties for non-compliance. Operating without a license may result in prison sentences of up to seven years and fines of up to NT$100 million.

Fraud or market manipulation involving digital assets carries even heavier consequences, with penalties ranging from three to ten years in prison and fines between NT$10 million and NT$200 million.

Industry clarity and market impact

The new law is expected to end years of regulatory uncertainty for Taiwan’s crypto sector. Coordination between regulators and industry groups will continue as detailed rules are developed.

For traders, the changes signal a period of adjustment. With around 7.6% of Taiwan’s population reportedly holding cryptocurrency as of early 2026, attention is likely to shift toward platforms that demonstrate compliance and transparency under the new regime.

A non-binding resolution tied to the legislation also calls on regulators to explore allowing licensed firms to offer cryptocurrency derivatives within a year, pointing to possible expansion in regulated products.