Taiwan Enacts Comprehensive Crypto Regulation with New Licensing and Penalties

Taiwan's Legislative Yuan Passes Major Crypto Regulation Bill

Taiwan has taken significant steps to regulate its cryptocurrency industry by approving a new law that requires all virtual asset service providers to secure licenses. This legislation, known as the Virtual Asset Service Act, has passed its final reading in the Legislative Yuan and is now awaiting the signature of President Lai Ching-te.

Once signed, the Executive Yuan will announce the effective date of the new regulations. The law introduces stringent operational and governance standards, including enhanced cybersecurity measures and mandates that customer funds be kept separate from company assets.

Existing platforms complying with anti-money laundering regulations will have a 12-month period to apply for the new licenses, with a total of 21 months allowed for full compliance with the Financial Supervisory Commission (FSC). Under the new framework, stablecoin issuers will face additional hurdles, needing approval from both the central bank and the FSC, alongside maintaining 100% asset reserves.

Non-compliance with the new regulations could result in severe penalties, including imprisonment for up to seven years and fines of up to NT$100 million (approximately $3.14 million) for unauthorized operations. More serious offenses, such as market manipulation, could lead to prison sentences ranging from three to ten years and fines between NT$10 million and NT$200 million.

This legislative move marks a shift from Taiwan's previous minimal oversight, establishing a robust regulatory environment for the cryptocurrency sector.