Taiwan's Legislative Yuan passed the Virtual Asset Service Act on July 1, giving the island its first comprehensive crypto framework and requiring all virtual asset service providers to obtain Financial Supervisory Commission licenses before operating.
The law now goes to President Lai Ching-te for signing within ten days. The Executive Yuan will then set the effective date, so no compliance clock has started yet.
Under the Act, every exchange, custodian, lender, and trading platform must hold an FSC license. Operators with existing anti-money laundering registration have 12 months to submit applications and 21 months total to achieve full approval, CoinDesk and The Block report. Platforms without prior AML registration must apply before they can operate.
Stablecoin issuers face stricter conditions. They need concurrent approval from both the FSC and Taiwan's central bank, must hold 100% reserves in trust at a domestic financial institution, and cannot pay interest to holders. The Taipei Times reports those reserves are shielded from creditor claims in bankruptcy, a feature that goes beyond lighter-touch regimes elsewhere.
Running an unlicensed platform or issuing an unlicensed stablecoin carries up to seven years in prison and fines up to NT$100 million, approximately $3.14 million, per CoinDesk. Market fraud and price manipulation draw three to ten years and NT$10 million to NT$200 million in fines, The Block reports.
The Act also opens the door to traditional financial institutions as future VASP operators. Crypto lawyer Kevin Cheng told The Block that established firms entering the space will bring compliance capacity that smaller existing platforms will struggle to match.
Taiwan now has a formal VASP licensing framework alongside Japan, Singapore, and Hong Kong, extending Asia's regulated-crypto bloc as digital asset markets weaken. Bitcoin fell 2.7% on July 1, while the global crypto market cap dropped 1.8%.