Taiwan has taken a significant step towards regulating its crypto market by passing a law that sets out a framework for virtual assets and stablecoins. The new law establishes a licensing regime for Virtual Asset Service Providers (VASPs) and introduces specific approval, reserve, and audit requirements for stablecoin issuers.
The law requires VASPs to obtain regulatory approval before operating in Taiwan. It also defines seven types of VASPs, including exchanges, trading platforms, custodians, and lenders, which must maintain robust internal controls and undergo audits.
Stablecoins issued in Taiwan must receive approval from both the central bank and the Financial Supervisory Commission (FSC). Issuers are required to maintain sufficient reserves held with a trustee and undergo regular audits.
The law also lays out enforcement measures aimed at preventing misconduct in the crypto sector. It prohibits crypto-based fraud and price manipulation, with penalties including prison time and substantial fines.