The authorities in Taiwan are implementing mandatory licensing for crypto platforms, requiring 100% reserves for stablecoins, and imposing criminal liability for operating without permission. This was reported by The Block.
The Taiwanese Parliament passed the stringent "Virtual Asset Service Act" on June 30 in its third reading. The document has been sent to the president for final approval, after which the effective date of the new regulations will be announced.
The Financial Supervisory Commission (FSC) of Taiwan will issue licenses for virtual asset service providers, including exchanges and trading platforms.
The law mandates the separation of client funds from company assets. It also tightens cybersecurity, internal control, and risk management requirements.
For those already registered under anti-money laundering regulations, a transition period is provided: 12 months to apply and up to 21 months in total to obtain full approval from the FSC and other necessary permits. Previously, crypto businesses in Taiwan only needed AML registration.
A separate regime is established for stablecoins. Their issuers and operators will require approval not only from the FSC but also from Taiwan's central bank. The law also mandates maintaining full reserve backing for this type of cryptocurrency.
Individuals illegally managing virtual asset service providers or stablecoins face imprisonment of up to seven years and fines of up to 100 million New Taiwan Dollars ($3.14 million). Fraud or market manipulation involving cryptocurrencies can result in prison sentences ranging from three to ten years and fines between 10 million New Taiwan Dollars ($314,000) and 200 million New Taiwan Dollars ($6.28 million).
It is worth noting that in May 2024, Taiwanese authorities approved prison sentences for using cryptocurrencies for money laundering.