Taiwan crypto law puts stablecoin issuers on a bank-led track

Taiwan's new Virtual Asset Service Act matters because it changes who is likely to win in the local stablecoin market. Instead of rewarding the fastest issuer, the law makes scale depend on licensing, full reserves, domestic custody, audits, and strict operating controls. That gives banks and other supervised finance firms a head start.

The law, passed by Taiwan's Legislative Yuan on June 30, creates a dedicated framework for trading platforms, stablecoin issuers, and other virtual asset service providers. Stablecoin issuers must keep full reserve backing, place segregated reserve assets in trust through domestic financial institutions, submit to regular audits, and avoid paying interest or other returns to holders. Reserve assets are also protected from creditor claims if an issuer goes bankrupt.

For existing VASPs, the shift goes beyond the earlier AML registration regime. Firms will need Financial Supervisory Commission approval to operate, plus internal controls, cybersecurity, and business continuity plans. Companies registered before the law takes effect will have 12 months to apply for licenses and 21 months to secure approval.

Taiwan still needs to publish secondary rules, including issuer eligibility, reserve composition, disclosures, and redemption procedures. But the direction is already clear: stablecoin issuance is now tied to supervised financial infrastructure, with steep penalties for illegal issuance or unlicensed VASP activity.