Taiwan Passes First Dedicated Crypto Licensing Law

FSC becomes sole crypto supervisor

The Financial Supervisory Commission becomes the sole main regulator for crypto firms under the new regime, taking charge of licensing, supervision and enforcement. Taiwan’s previous framework required crypto businesses mainly to complete anti-money laundering registration. The new framework requires explicit operating approval before firms can legally serve users.

The earlier system had been described as an AML-only or registration-only regime. It had governed the sector since 2021, while Taiwan’s 2024 AML registration regime is now being replaced by the new statute. The shift means crypto businesses will be treated more like specially permitted financial businesses than lightly supervised technology platforms.

The law covers virtual asset service providers, including crypto exchanges, trading platforms, custodians, wallet operators and other crypto platforms. Operators must secure licenses across seven defined categories: exchange, trading platform, transfer, custody, underwriting, lending and other services. That structure prevents a platform from assuming one broad approval can cover every crypto business line.

Existing AML-registered firms will receive a transition period rather than being forced off the market immediately. Firms that already completed AML registration get 12 months from the law’s effective date to submit license applications, and up to 21 months in total to obtain full FSC approval and other required permits. The 21-month review period may be extended by an additional three months where necessary.

New crypto entrants do not receive the same runway and must meet the full requirements from day one. Eight incumbent firms that completed AML registration were identified as covered by the phased transition runway. Named incumbents include MaiCoin, BitoGroup and XREX.

Licensed firms must segregate customer assets from corporate funds, meaning user assets cannot be mixed with company operating capital. They also must meet stronger cybersecurity standards and implement formal governance systems, risk management systems, internal controls and compliance structures.

Compliance costs for crypto exchanges in Taiwan are expected to rise under the new regime. Smaller providers may struggle with licensing, custody, cybersecurity and governance requirements, creating conditions that could accelerate consolidation in the Taiwanese crypto market.

We’ve launched the all-new COIN360 Perp DEX, built for traders who move fast!

Trade 130+ assets with up to 100× leverage, enjoy instant order placement and low-slippage swaps, and earn USDC passive yield while climbing the leaderboard. Your trades deserve more than speed — they deserve mastery.

Stablecoin issuance gets bank-only approval path

Stablecoins receive their first dedicated regulatory rulebook in Taiwan under the new law. Issuance now falls under direct regulatory approval, meaning stablecoins cannot be issued in Taiwan without prior authorization from both the central bank and the Financial Supervisory Commission.

Domestic stablecoin issuance is tightly gated because only banks may issue stablecoins. Domestic stablecoins must be pegged only to a fiat currency, rather than to baskets of assets, crypto assets or other reference structures. Issuers must maintain 100% asset reserves at all times.

Reserve requirements are central to the new stablecoin framework. Stablecoin reserves must be held on a full one-to-one basis, segregated from company funds and placed in trust. Regular audits are mandatory. Issuers are also prohibited from paying interest to holders, while algorithmic stablecoins are excluded from the permitted domestic issuance model.

Foreign-issued stablecoins such as Tether (USDT) and USD Coin (USDC) are not treated as money under the framework. They are treated as regulated commodities and must be listed on a licensed local exchange and receive FSC approval before being offered in Taiwan.

Offshore VASPs that solicit Taiwanese users without a license face enforcement under the new framework. The Virtual Asset Service Provider Association identified offshore VASPs soliciting local users without authorization as a priority for its cross-domain anti-fraud agenda.

The Virtual Asset Service Provider Association said it would work to align Taiwan with international standards through three committees focused on listing review, discipline, and fraud prevention and compliance. The framework also requires offshore firms seeking Taiwanese users to establish a local branch and secure FSC approval.

Criminal penalties target unauthorized operations and market abuse

Unauthorized operation of crypto platforms or stablecoin services may result in prison sentences of up to seven years. Unauthorized operation may also carry penalties of up to NT$100 million, or roughly $3.14 million.

Market fraud and price manipulation offenses face tougher sanctions. Market fraud or price manipulation can bring three to ten years in prison, while fines range from NT$10 million to NT$200 million. NT$10 million was converted to about $313,582.

The law explicitly criminalizes false, fraudulent or concealed disclosure of information material to virtual asset issuance or trading. It also criminalizes direct or indirect manipulation of price, supply or demand. Market manipulation examples include pump-and-dump schemes, wash trading and insider dumping.

Dedicated criminal provisions give prosecutors a sharper enforcement tool than general fraud statutes, where proving intent was previously more difficult. The enforcement section moves Taiwan’s crypto regime beyond paperwork compliance by creating criminal exposure for bad actors.

Lawmakers also adopted a nonbinding resolution asking the FSC to submit a plan within one year to allow virtual asset firms to offer cryptocurrency derivatives. The resolution signals that licensed crypto firms may eventually be permitted to move beyond spot services into more complex products after the regulatory groundwork is built.

Taiwan’s framework is positioned alongside broader global regulatory tightening, including the EU’s MiCA framework, U.S. efforts to establish federal market structure rules for digital assets and the United States’ GENIUS Act. The comparison is tied to a wider convergence around crypto licensing and reserve-backed stablecoins.

The regimes restrict foreign issuers in different ways. MiCA uses EU passporting conditions, the GENIUS Act requires foreign stablecoin issuers’ home regimes to be deemed equivalent and registered with the OCC, while Taiwan requires offshore VASPs to establish a local branch and secure FSC approval.

Stablecoins are moving closer to payment-instrument-style supervision rather than being treated only as digital assets. The BIS recently warned about foreign-exchange risks posed by dollar-pegged stablecoins. Taiwan’s rules are designed to prevent reserve opacity, offshore leakage and algorithmic-risk blowups from entering the domestic financial system.

The law creates a clearer operating path for serious firms seeking regulatory certainty in Asia, while increasing the burden on smaller crypto-native providers. For users, the framework could reduce scam risk and improve custody protections, but it may also narrow platform choice if smaller firms cannot absorb the compliance load.