Taiwan's new crypto law: licensing and tough penalties

Taiwan's Legislative Yuan approved the Virtual Asset Service Act on Tuesday, sending it to President Lai Ching-te for formal signing within ten days. Once signed, the Executive Yuan will set the effective date.

The law requires all virtual asset service providers, including cryptocurrency exchanges and platforms, to obtain a license from the Financial Supervisory Commission (FSC). Platforms already registered for anti-money laundering compliance get a 12-month grace period to apply, and up to 21 months for full FSC approval and any other required permits. Until now, crypto businesses in Taiwan only needed to register for AML compliance.

Stablecoin issuers face additional requirements. They must win approval from both the central bank and the FSC, and maintain 100% asset reserves at all times. Stablecoins are cryptocurrencies pegged to an external reference such as the U.S. dollar.

The law introduces serious consequences for breaking the rules. Unauthorized operation of crypto platforms or stablecoin services could result in prison sentences of up to seven years and fines up to NT$100 million (about $3.14 million). Market fraud or price manipulation carries three to ten years and fines ranging from NT$10 million to NT$200 million.

Compliance with the licensing regime reduces legal exposure for platforms. Non-compliance or fraud invites severe criminal penalties, and the central bank's veto power over stablecoins gives regulators broad discretion to block new issuers.

President Lai is expected to sign the bill within ten days.