Taipei, Taiwan – Taiwan’s lawmakers are set to advance cryptocurrency regulation this week with a Cabinet review of the Virtual Asset Service Act, paving the way for the island’s first regulated stablecoin launch by the second half of 2026. Financial Supervisory Commission (FSC) Chairman Peng Jin-long confirmed the timeline during a legislative hearing on December 3, 2025, emphasizing high consensus after three prior meetings. The bill’s passage would establish licensing for virtual asset service providers (VASPs) and enable stablecoin issuance, mirroring European standards to boost investor protection and market stability.
This development positions Taiwan as a potential leader in Asia’s regulated crypto landscape, amid global pushes for clearer digital asset frameworks.
Legislative Timeline and Cabinet Review
The Cabinet plans to review the Virtual Asset Service Act this week, following extensive deliberations that Peng described as achieving substantial agreement. If approved in the current session and passed in the next, subordinate regulations would follow, with a mandatory six-month implementation period before enforcement. This schedule aligns with Taiwan’s push to operationalize the law swiftly, allowing stablecoin entry into the market by mid- to late 2026.
Lawmakers aim to address long-standing gaps in crypto oversight, where firms currently navigate anti-money laundering (AML) rules without dedicated licensing. The FSC draft, released earlier in 2025 after public consultation, targets submission to the Executive Yuan by mid-year, though momentum has accelerated. A parallel version from legislator Huang Shan-shan adds urgency, with both under consideration to fast-track approval.
Key Provisions of the Virtual Asset Service Act
The Act mandates FSC approval for VASPs, including exchanges, custodians, and brokerages, requiring local incorporation, minimum capital from NT$10 million to NT$300 million ($300,000–$9 million), and operational bonds. Providers must segregate client assets, restrict lending without consent, implement audits, and join the Taiwan VASP Association for self-regulation. Naming restrictions limit “virtual asset” terms to licensed entities, while internal controls cover information security and business continuity.
Stablecoin rules demand full reserve backing, timely redemptions, and disclosures, initially limited to financial institutions per FSC and central bank agreement. Non-bank issuers could follow later, with the peg undecided between the Taiwan dollar (NT$) or US dollar (USD), prioritizing risk management. Penalties for violations include fines up to NT$5 million ($150,000) and up to two years’ imprisonment for officials, targeting fraud, manipulation, and unlicensed operations.
Stablecoin Launch: 2026 Target and Issuance Details
Peng Jin-long stated a Taiwan-issued stablecoin could debut in H2 2026 at the earliest, led by banks in collaboration with the central bank. Peg options remain open, with USD seen as simpler but NT$ ties under monetary policy review. The framework draws from the EU’s Markets in Crypto-Assets (MiCA) regulation, ensuring reserves, consumer safeguards, and VASP licensing.
Initial restrictions to regulated entities mitigate risks exposed by global failures like FTX, prioritizing stability over rapid innovation. Overseas stablecoins could list via VASPs if meeting disclosure standards, akin to Japan’s USDC approvals. Industry experts anticipate reduced remittance costs and faster cross-border payments, reshaping Taiwan’s financial ecosystem.
Broader Regulatory Evolution in Taiwan
Taiwan’s crypto path evolved from 2023’s Virtual Asset Management Bill first reading, mandating permits and association membership. By March 2025, dual drafts from FSC and lawmakers introduced 60-day consultations, focusing on AML enhancements and fraud prevention. New AML rules already impose management qualifications and asset protections on VASPs.
The FSC’s proactive stance responds to rising fraud, money laundering, and disputes, with only one security token program approved to date due to high thresholds. Four institutions applied for licenses by April 2025, signaling market readiness. Self-regulation via the Taiwan Virtual Asset Platform and Transaction Business Association supports FSC efforts.
Industry and Global Implications
Taiwan’s move could attract compliant firms, fostering a secure hub amid Asia’s patchwork regulations. Banks leading stablecoin issuance ensures oversight, while future non-bank entry broadens access. For investors, clearer rules promise recourse against platform failures, unlike current vulnerabilities.