Taiwanese authorities are introducing mandatory licensing for crypto platforms, 100% reserve requirements for stablecoins, and criminal liability for operating without permission, according to The Block.
The Taiwanese Parliament passed the “Virtual Asset Services Act,” which establishes strict regulations, on June 30 in its third reading. The document has been sent to the president for final approval. The effective date of the new regulations will be announced thereafter.
Licenses for virtual asset service providers, including exchanges and trading platforms, will be issued by the Financial Supervisory Commission (FSC) of Taiwan.
The law mandates the separation of client funds from company assets. It also tightens requirements for cybersecurity, internal controls, and risk management.
A transition period is provided for market participants already registered under anti-money laundering rules: 12 months to apply and up to 21 months in total to obtain full approval from the FSC and other necessary permits. Previously, crypto businesses in Taiwan only needed AML registration.
A separate regime is introduced for stablecoins. Their issuers and operators will require approval not only from the FSC but also from Taiwan’s central bank. The law also requires full reserve backing for this type of cryptocurrency.
Individuals illegally managing virtual asset service providers or stablecoins face up to seven years in prison and fines up to 100 million Taiwanese dollars ($3.14 million). Fraud or manipulation of the cryptocurrency market can result in prison sentences ranging from three to ten years and fines between 10 million Taiwanese dollars ($314,000) and 200 million Taiwanese dollars ($6.28 million).
In May 2024, Taiwanese authorities approved prison terms for using cryptocurrencies for money laundering.
