Taiwan Cracks Down on Unlicensed Crypto Firms with Seven Year Jail Terms

Taiwan has made significant changes to its cryptocurrency regulations by introducing a full licensing system for virtual asset service providers (VASPs). The Virtual Asset Service Act, passed on June 30, gives the Financial Supervisory Commission sole control over virtual asset supervision.

The new law requires VASPs to obtain licenses from the FSC, rather than just registering for anti-money laundering purposes. This change brings Taiwan's regulations closer to a full financial services model.

Firms that already completed AML registration will have a transition period of 12 months to apply for licenses and 21 months to obtain certification after the law takes effect. Stablecoin issuance is limited to domestic banks, with tokens pegged only to fiat currencies.

The penalty for operating virtual asset services or issuing stablecoins without authorization is up to seven years in prison and fines of up to $3.1 million. The FSC still needs to draft secondary legislation by early 2027, covering operational details and compliance procedures.