Author: Max, CryptoCity
FSC Drives Licensing Transformation, Establishes Comprehensive VASP Regulatory Framework
Peng Chin-lung, Chairman of Taiwan’s Financial Supervisory Commission (FSC), delivered a special report on “The Promotion and Outlook of FinTech Development” to the Legislative Yuan’s Finance Committee on May 7th. The report highlighted that as emerging technologies rapidly evolve, financial technology (FinTech) has become crucial for enhancing industrial competitiveness. A key policy focus for the FSC is now the implementation of robust financial and operational supervision for Virtual Asset Service Providers (VASPs).
Taiwan’s virtual asset regulation is set to undergo a landmark transformation with the “Virtual Asset Service Act” draft, approved by the Executive Yuan in April 2025 and subsequently sent to the Legislative Yuan. This significant shift moves the regulatory landscape from a previous “Anti-Money Laundering Registration System” to a more stringent and comprehensive “Licensing System.”
- Related News: Latest 2026 Virtual Asset Service Act Draft Explained: Stablecoins, Licenses, and Penalties Analyzed
This systemic transition includes clearly defined transitional period regulations. Operators who completed AML registration before the new law takes effect must apply for a license from the competent authority within nine months of the law’s implementation and secure the required license within 18 months. Failure to complete this transition by the deadline will prohibit them from continuing relevant operations. (Draft versions provided by the Taiwan People’s Party and Legislator Lin Szu-ming suggest obtaining a license within 15 months.)
The FSC emphasized that this adjustment is fundamentally aimed at establishing a regular communication mechanism between the traditional financial industry and VASP operators. This ensures that while virtual assets foster innovation, they also uphold critical risk control measures and safeguard consumer rights.
Chairman Peng Chin-lung stated that the FSC is actively cultivating a friendly development environment and will further enhance Taiwan’s financial market innovation momentum through strategic public-private collaboration.
Legislative Momentum: Multiple Drafts Reflect Cross-Party Consensus
Beyond the Executive Yuan’s version, four additional specialist law draft bills have been proposed by different party caucuses and legislators in the Legislative Yuan, underscoring a high degree of cross-party consensus on the urgent need for comprehensive industry regulation. The Taiwan People’s Party caucus, Democratic Progressive Party Legislator Lin Chu-yin, and Kuomintang Legislators Lin Szu-ming and Ko Ju-chun have each drafted their versions of the “Virtual Asset Service Act.”
The Taiwan People’s Party’s version highlights that the virtual asset market valuation once approached US$2.5 trillion in January 2022. Even after major disruptive events like the Terra Luna collapse and FTX bankruptcy, the market size has consistently remained above US$1 trillion. Therefore, establishing a comprehensive regulatory system to protect trader rights is an imperative.
Versions from Legislators Ko Ju-chun and Lin Chu-yin, among others, broadly reference leading international legislative trends, including those from the EU (MiCA), Japan, South Korea, and Hong Kong, to effectively regulate the diverse nature of virtual assets. Ko Ju-chun’s version specifically focuses on the profound impact of virtual assets on traditional finance and the real economy, encompassing critical application scenarios such as cross-border payments, financing and lending, and sophisticated supply chain finance solutions.
Regarding administrative penalties, all versions propose severe sanctions. Violators of mandatory or prohibitory provisions could face substantial fines of up to NT$6 million, with explicit orders to rectify within a specified period, and repeated penalties for continued non-compliance. This rigorous regulatory design aims to significantly enhance public trust in the virtual asset market and ensure the unwavering stability of the rule of law and financial order.
Stablecoin Regulatory Chapter Becomes a Highlight, Strict Reserve and Interest Regulations
Within the special law drafts, “Stablecoin Issuance and Management” is designated as an independent and critical chapter, reflecting the supervisory authority’s heightened concern for the inherent risks associated with these assets. The FSC explicitly mandates that stablecoin issuance within Taiwan must be officially licensed. Issuers are required to maintain full reserve assets and are obligated to issue and redeem stablecoins at par value. To prevent stablecoins from being mistaken for traditional bank deposits and to mitigate speculative risks, the draft explicitly states that stablecoin issuers are strictly prohibited from paying interest to holders. Furthermore, operators must establish stringent internal control, internal audit, and robust cybersecurity management systems, and are required to regularly report and disclose relevant financial and operational information to ensure utmost transparency.
For stablecoin reserve requirements, the draft introduces powerful deterrent mechanisms. If an issuer fails to deposit sufficient reserves, the central bank will charge annual interest at 5% above the publicly announced minimum lending rate for the deficit amount. In severe cases, administrative fines ranging from NT$300,000 to NT$6 million will be imposed. This comprehensive supervisory framework, meticulously combining financial stability with cutting-edge cybersecurity resilience, aims to ensure the robust and secure development of stablecoins in the Taiwanese market. The FSC also indicated that once the special law completes its legislative process, it will further formulate relevant subsidiary laws to formally open applications for stablecoin issuance.
Asset Tokenization and AI Lead the Future, FinTech Innovation Continues Unabated
In addition to establishing the foundational legal framework, the FSC is simultaneously advancing pioneering experiments in Real World Asset (RWA) tokenization, targeting bonds and gold as initial assets. Transforming physical assets into digital certificates through advanced blockchain technology not only promises to significantly enhance asset liquidity but also aims to reduce the complexity of transactions and settlements.
Furthermore, the FSC is actively promoting the “Hidden Gem Discovery Program” (隱璞尋光計劃). Since its launch in March 2025, the program has proactively engaged with 15 leading financial institutions and innovative FinTech startups, assisting in clarifying complex regulatory challenges within innovative experiments and pilot operations, and identifying promising cases with substantial development potential. This forward-looking initiative seamlessly complements the “Inclusive Finance” proposal competition held in 2025, collectively driving digital financial innovation across the nation.
On the technology application front, the FSC is also focusing intently on the transformative development of agent-based AI and programmable AI. To guide financial institutions in the appropriate and responsible application of AI, the FSC is advancing the “Programmable AI Governance Project,” meticulously researching domestic and international regulations and comprehensively inventorying diverse financial application scenarios to establish quantifiable risk assessment indicators.
The report concludes by mentioning that the “2025 Taipei FinTech Forum,” held in October 2025, attracted over 30 esteemed experts from 8 countries and nearly 1,000 physical attendees. Through robust international exchange and strategic technological integration, Taiwan is actively striving to build a cutting-edge digital financial ecosystem that perfectly balances innovative momentum with unwavering security and resilience amidst the dynamic global FinTech wave.
(The above content is excerpted and reprinted with authorization from our partner CryptoCity.)
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