Taiwan Cracks Down on Crypto with New Financial Oversight

Taiwan's Legislative Yuan has approved the Virtual Asset Service Act, ushering in a new era of comprehensive financial supervision for the cryptocurrency sector. This landmark legislation, passed on June 30, transitions the island from a registration-based system to a broader oversight regime.

The new act categorizes virtual asset service providers into seven types, including exchanges, custodians, and lenders. Licensed entities will be required to meet rigorous standards for personnel, cybersecurity, and asset management, ensuring customer funds are segregated from company assets.

Stablecoin issuers face even higher regulatory hurdles, needing central bank and financial commission approval, alongside full reserve backing. Penalties for non-compliance are severe, with potential prison sentences of up to seven years and fines reaching NT$100 million (approximately $3.1 million) for operating unlicensed platforms.

This regulatory overhaul positions Taiwan alongside other major jurisdictions like Japan and Hong Kong in bringing the crypto industry under formal financial frameworks, with the Financial Supervisory Commission set to draft secondary rules to implement the regime.