A Licensing Regime Replaces a Registration Regime
On June 30, 2026, Taiwan's Legislative Yuan passed the Virtual Asset Service Act (虛擬資產服務法) on third reading, according to the Financial Supervisory Commission's own announcement and confirmed by Taiwan's Central News Agency (CNA). The bill now goes to President Lai Ching-te for promulgation; the Executive Yuan will separately set a commencement date, meaning the substantive obligations are not yet in force.
The law replaces Taiwan's current anti-money-laundering (AML) registration regime — a one-page disclosure filing — with a full Financial Supervisory Commission (FSC) licensing regime covering seven categories of virtual asset service provider (VASP): exchange operators, trading platforms, transfer services, custodians, underwriters, lenders, and other service providers. Stablecoin issuers face a dual-approval track, needing sign-off from both the central bank and the FSC, and must hold 100% reserve assets in domestic financial-institution trusts, subject to periodic audit and public disclosure. Issuers are barred from paying yield on stablecoins, and in a bankruptcy, reserve assets sit outside the issuer's estate with holders getting priority claims.
Existing AML-registered firms — including established local platforms like BitoPro and MaiCoin's MAX — get a 12-month window to apply for a license and up to 21 months total to secure full FSC approval, with a possible three-month extension. Miss that window, or operate without a license at all, and the penalty is up to seven years in prison and fines up to NT$100 million (~$3.14 million). Fraudulent or manipulative trading carries a steeper tier: three to ten years and fines of NT$10-200 million.
The Case For It
The strongest argument for the Act is that Taiwan's crypto sector has been operating for years under a regime built for AML compliance, not prudential supervision — a one-page form was never going to catch custody failures, undercapitalized stablecoin issuers, or exchange insolvency. The FSC has already fined both BitoPro and MaiCoin for AML deficiencies in customer due diligence and transaction monitoring, evidence that even registered firms weren't meeting basic control standards. A jurisdiction that wants institutional capital and cross-border stablecoin activity needs a licensing regime with real teeth — full reserve backing, segregated custody, and audit requirements are the same baseline the EU's MiCA and Hong Kong's VASP regime already impose. Taiwan's Premier Cho Jung-tai framed the bill around aligning with "international standards," and on the stablecoin reserve and custody provisions specifically, that alignment is real and overdue.
Where Proportionality Gets Tested
The steelman only carries the reserve and custody provisions, not the criminal-penalty architecture layered on top. A seven-year prison term for operating an unlicensed VASP sits closer to Taiwan's penalties for serious fraud than to the civil fines and cease-and-desist orders that anchor comparable regimes elsewhere — MiCA enforcement in the EU, for instance, runs primarily through administrative fines and license revocation, not custodial sentences for licensing lapses alone. Criminalizing the licensing gap itself — as opposed to fraud, theft, or manipulation, which already carry the harsher 3-10 year tier — risks treating a paperwork failure the same as a market-integrity offense. For a smaller exchange navigating a genuinely new 21-month approval process for the first time, that asymmetry between "didn't file in time" and "defrauded customers" is a lot of criminal exposure for a compliance timing miss.
There's also real execution risk in the subordinate rulemaking. Taiwanese reporting indicates the FSC aims to finish implementing regulations in early 2027 — meaning the 12-21 month license clock won't even start running until the Executive Yuan sets a commencement date, itself contingent on that rulemaking. Firms that have already invested in AML compliance under the old regime are now waiting on rules that don't exist yet, with a felony-tier deadline attached once they do.
The Regional Signal
Taiwan joins Hong Kong, Singapore, and the EU in moving crypto out of light-touch registration and into licensed, reserve-backed supervision.
That direction is sound, and done well it gives institutional users and cross-border stablecoin flows the legal certainty that light-touch AML rules never provided. But the Act's drafters had a choice between calibrating penalties to the severity of the underlying conduct and defaulting to Taiwan's existing heavy criminal-penalty toolkit for financial law. They chose the latter. As the FSC writes its implementing rules over the coming months, the question worth watching isn't whether Taiwan regulates crypto — that ship sailed on June 30 — but whether enforcement discretion in practice treats a missed license deadline like the paperwork problem it is, rather than the market-manipulation-adjacent felony the statute allows it to become.