Taiwan Prepares for Comprehensive Virtual Asset Regulation: A 2027 Horizon

Taiwan is on the cusp of a significant transformation in its digital asset landscape, as the Financial Supervisory Commission (FSC) advances into the crucial phase of drafting detailed sub-regulations for virtual assets. This move follows the recent legislative approval of the “Virtual Asset Service Act,” signaling a robust and comprehensive approach to overseeing the burgeoning crypto sector.

FSC Chairman Peng Jin-lung recently announced that the commission is diligently working on nine authorized sub-regulations, with a particular focus on stablecoin oversight—a topic of intense market interest. The ambitious timeline projects the official promulgation and implementation of both the foundational act and its accompanying sub-regulations as early as the first quarter of 2027.

Speaking at the FinTechOn 2026 & Asia FinTech Alliance Summit on September 2nd, Chairman Peng highlighted a global shift in perspective: the discourse around virtual assets and stablecoins has evolved from questioning their existence to strategizing their sound development and regulation. The FSC’s vision is to foster a dynamic ecosystem where traditional finance, digital finance, and blockchain finance can thrive in parallel, all while meticulously managing associated risks.

The Foundation: Taiwan’s Virtual Asset Service Act

A pivotal moment arrived on June 30th when the “Virtual Asset Service Act” successfully passed its third reading in the Legislative Yuan. This landmark legislation was subsequently promulgated by the President on July 22nd, officially establishing Taiwan’s first dedicated legal framework for Virtual Asset Service Providers (VASPs).

This new act significantly broadens the scope of regulation beyond the previous anti-money laundering (AML)-centric approach. It now encompasses critical areas such as VASP operational standards, client asset protection, information security protocols, market integrity, and the issuance of stablecoins. While the act is now law, its provisions will become fully effective concurrently with the implementation of the detailed sub-regulations, a process the Executive Yuan is expected to finalize for Q1 2027.

Unpacking the Nine Pillars of Regulation

The FSC’s nine forthcoming sub-regulations are designed to provide granular detail and operational clarity across the virtual asset sector. These comprehensive guidelines will cover:

• VASP Establishment Standards: Defining the criteria for setting up virtual asset service providers.
• Personnel Qualifications: Establishing requirements for responsible persons and key business personnel.
• Financial & Business Management: Outlining robust financial and operational management practices.
• Internal Control Systems: Mandating stringent internal controls to ensure operational integrity.
• Business Outsourcing: Regulating the outsourcing of VASP functions.
• Account Management: Protocols for managing virtual asset accounts.
• Suspicious & Abnormal Transactions: Mechanisms for identifying and reporting illicit or unusual activities.
• Industry Association Management: Governing the oversight and functions of VASP industry associations.
• Financial Reporting: Standards for financial report preparation and submission.
• Stablecoin Issuance & Management: The highly anticipated framework for stablecoin operations.

These detailed rules are not merely bureaucratic formalities; they are the bedrock upon which the new system will operate, dictating everything from capital requirements and organizational structure to cybersecurity resilience and client asset safeguarding. They will be instrumental in determining the practical feasibility and compliance costs for operators seeking licenses.

VASP Categorization and Licensing

The new act categorizes VASP activities into seven distinct types: exchange, trading platform, transfer, custody, underwriting, lending, and other related services. Under this new regime, operators will no longer be able to provide services solely based on AML registration. Instead, they must secure specific permits and licenses from the FSC, tailored to their exact business scope.

Spotlight on Stablecoins: A Dual Approval Mandate

Stablecoin regulation stands out as a primary focus within the new sub-regulation framework. The “Virtual Asset Service Act” mandates a stringent dual-approval process for any entity wishing to issue stablecoins within Taiwan: initial consent from the Central Bank, followed by a permit from the FSC.

Issuers will be held to rigorous standards, including maintaining full reserve assets, entrusting these reserves to a third party, undergoing regular audits, and fulfilling comprehensive information disclosure obligations. The upcoming sub-regulations will further elaborate on issuer qualifications, application procedures, capital thresholds, permissible stablecoin types, use cases, reserve asset management, and the specifics of issuance and redemption processes.

It is crucial to note that the implementation of this dedicated law does not grant immediate permission for market participants to issue “New Taiwan Dollar stablecoins.” This will only be possible after the sub-regulations are announced, and operators successfully navigate the Central Bank and FSC review processes to obtain the necessary permits.

Regarding existing offshore stablecoins like USDT and USDC, the FSC has clarified that they remain classified as virtual assets. Taiwanese VASPs intending to offer trading services for such offshore stablecoins must adhere to a specific listing/delisting review mechanism, which involves vetting by the industry association and subsequent approval by the FSC.

Central Bank Governor Yang Chin-long has also weighed in, noting that NTD stablecoins, issued by domestic entities, offer a more direct regulatory path. Conversely, foreign currency stablecoins, such as USD-pegged variants, involve foreign exchange capital flows. Preliminary plans suggest these might be managed similarly to the foreign exchange operations of designated banks, complemented by a new stablecoin transfer data reporting mechanism.

Navigating the Transition: A Two-Year Window for Existing VASPs

The new regulatory landscape ushers in a significant shift for existing VASPs, transitioning them from an AML registration system to a full operational licensing model. Operators currently registered for AML purposes, as well as financial institutions offering relevant services under FSC guidelines, will have a 12-month window from the new law’s effective date to submit their license applications.

Furthermore, these operators must secure their FSC permits and licenses within 21 months of the law’s implementation, with a potential one-time extension of three months. This provides existing players with approximately two years to complete the transition, during which time substantial investments will be required for compliance infrastructure, including capital, internal controls, cybersecurity, financial reporting, and robust client asset protection measures.

Notably, the new law also opens the door for traditional financial institutions, such as banks, to apply for concurrent VASP business operations. This signals a future where virtual asset custody, trading, stablecoin services, and real-world asset tokenization may see participation not only from crypto-native firms but also from established financial players, provided they obtain the necessary licenses.

Beyond the Initial Scope: The Future of Derivatives

While the initial nine sub-regulations are comprehensive, certain advanced virtual asset products, such as perpetual contracts, dual-currency wealth management, and other derivatives, will not be immediately available upon their implementation. The Legislative Yuan has tasked the FSC with developing a specific plan for these products within one year of the dedicated law’s enactment. The regulatory authority anticipates finalizing a policy framework for derivatives as early as the first quarter of 2028.

Implications for the Industry

The forthcoming nine sub-regulations will be instrumental in translating Taiwan’s legal framework for virtual assets into practical operational guidelines. For industry participants, the challenge extends beyond merely acquiring a license; it encompasses ongoing compliance costs related to capital thresholds, stringent client asset segregation, advanced wallet and cybersecurity management, continuous abnormal transaction monitoring, and transparent financial disclosures.

Regarding stablecoins, the dual oversight by the Central Bank and FSC, coupled with full reserve and trust custody requirements, is a confirmed baseline. However, critical details such as which institutions will be granted initial permission, whether NTD or foreign currency stablecoins will be allowed, and their specific applications in payment or cross-border scenarios, await the official unveiling of the sub-regulations.