Taiwan’s Virtual Asset Regulation Advances as Stablecoin Adoption Surges Among Businesses

Taiwan is on the cusp of a significant new era in virtual asset regulation. Financial Supervisory Commission (FSC) Chairman Peng Jin-lung recently announced at a New Year press conference that the draft of the “Virtual Asset Services Act” has successfully completed its review process within the Executive Yuan. The legislative proposal is now poised for submission to the Legislative Yuan, pending approval from the Executive Yuan Council.

Market Dynamics Outpace Legislation: The Rise of Stablecoins in Trade

Even as regulatory frameworks are being finalized, the market landscape is already undergoing quiet yet profound transformations. FSC Vice Chairperson Chuang Hsiu-yuan revealed that a growing number of Taiwanese import and export businesses have proactively begun utilizing stablecoins for practical payment and receipt functions.

Chuang Hsiu-yuan elaborated on this trend, noting the increasing global prominence of stablecoins in international trade and cross-border payment scenarios. Consequently, many multinational import/export firms in Taiwan are now actively accepting USD stablecoins. As these enterprises accumulate stablecoin holdings, their inherent trust in the traditional financial system will inevitably drive them to seek integration with Taiwanese financial institutions for their subsequent deposit, management, and payment needs.

Financial Institutions Respond: Custody as the Gateway to Virtual Assets

Recognizing this burgeoning corporate demand, financial institutions are swiftly adapting. Chuang Hsiu-yuan highlighted that custody services are emerging as the crucial first step for banks venturing into the stablecoin business. Several banks are already in the planning stages, with some having actively invested in virtual asset custody services, keenly aware of this direct and growing enterprise requirement.

Looking ahead, Chuang Hsiu-yuan suggested that the widespread adoption of stablecoins in supply chain payments could naturally lead to a demand for NTD stablecoins. The FSC’s vision is for financial institutions to provide “seamless” services for cross-border payments, whether involving fiat currencies or stablecoins, thereby significantly enhancing corporate efficiency.

She also shared insights from recent market feedback, indicating that the financial sector has already identified concrete application scenarios and is “quietly preparing” for the regulatory changes. The FSC anticipates that once the specialized law is enacted, these firms will have achieved a considerable level of technical maturity, paving the way for the introduction of even more sophisticated financial services.

Robust Custody Standards: Safeguarding Virtual Assets

In parallel with legislative progress, the FSC has established clear and stringent standards for virtual asset custody. Operators are mandated to segregate client virtual assets from their own holdings. Furthermore, acknowledging the elevated risk of hot wallet hacks, the FSC issued a directive in December last year, requiring all operators’ core systems to meet stringent cybersecurity certification standards. A specified proportion of client virtual assets must also be securely stored in cold wallets, offering enhanced protection.