Taiwan Passes Sweeping Crypto Law with Licensing and Reserve Mandates

Taiwan has taken a significant step in regulating its crypto sector by enacting comprehensive new regulations for cryptocurrency operations. The Virtual Asset Service Act was passed during its third reading and forwarded to President Lai Ching-te for formal signing, which is anticipated within the next ten days.

The law requires all virtual asset service providers, including cryptocurrency exchanges and platforms, to secure explicit licensing from the Financial Supervisory Commission (FSC) before they can legally operate in the country. This includes stricter standards around cybersecurity protections, keeping customer funds separate from company assets, and strengthening internal governance and risk management.

Platforms that are already registered for anti-money laundering compliance will receive a 12-month grace period to submit license applications and up to 21 months in total to obtain full FSC approval and any other required permits. Stablecoin businesses face tougher hurdles, requiring approval from both the central bank and the FSC while maintaining 100% asset reserves at all times.

The law also introduces serious consequences for breaking the rules, including prison sentences of up to seven years and penalties of up to NT$100 million (about $3.14 million) for unauthorized operation of crypto platforms or stablecoin services.