Taiwan FSC drafts nine regulations under Virtual Asset Service Act for Q1 2027

Photo: Rostislav Uzunov / Pexels

The island nation's first comprehensive crypto licensing regime replaces its lighter AML registration system with strict rules covering exchanges, stablecoins, and custody.

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by Editorial Team

Sep. 3, 2026

Taiwan is building out one of Asia’s most detailed crypto regulatory frameworks, and it’s moving fast. The Financial Supervisory Commission (FSC) is drafting nine sets of supplementary regulations under the Virtual Asset Service Act, with a target of having them finalized and enforced by the first quarter of 2027.

The Act itself, a 56-article piece of legislation, cleared the Legislative Yuan on June 30, 2026.

What the Act covers

FSC Chairman Peng Jin-lung announced on September 2, 2026, that the nine regulatory packages will flesh out the Act’s requirements across a wide range of crypto activities. The law defines seven categories of licensed operations: exchanges, trading platforms, transfers, custody, underwriting, lending, and a catch-all “others” category.

Each business category requires its own separate license. A firm running both an exchange and a custody service would need two distinct approvals. The FSC is the sole regulator for all of it, consolidating oversight that was previously more fragmented.

Stablecoins get particularly granular treatment. Domestic stablecoin issuers must obtain FSC permission, peg their tokens to a fiat currency, and maintain 1:1 reserves held in segregated accounts at domestic financial institutions.

Foreign-issued stablecoins like USDT and USDC receive different treatment. The Act classifies them as commodities rather than regulated stablecoins, which means they can still be traded locally but only on platforms that hold the appropriate license.

From registration to licensing

This legislation represents a fundamental shift in how Taiwan handles crypto oversight. Since 2021, virtual asset service providers (VASPs) operated under a relatively lightweight anti-money laundering registration system. The new Act replaces that with a full licensing regime, complete with ongoing FSC monitoring and compliance obligations.

The transition won’t happen overnight. Existing AML-registered VASPs get a 12-month window from the Act’s effective date to apply for their new licenses, with a maximum of 21 months to achieve full compliance. New entrants, however, face immediate licensing requirements with no grace period.

The penalties for skirting the rules are substantial. Operating without a license can result in up to seven years of imprisonment and fines reaching NT$100 million. Fraud carries even steeper consequences: three to ten years in prison and fines of up to NT$200 million.

Asia’s regulatory chess match

The FSC has explicitly positioned the Act as bringing the island in line with international standards, citing frameworks already established in the EU, Japan, and South Korea as reference points.

The EU’s Markets in Crypto-Assets (MiCA) regulation went into full effect in late 2024. Japan has maintained one of the world’s most structured crypto regulatory environments for years. South Korea’s Virtual Asset User Protection Act took effect in mid-2024.

What comes next

The FSC has signaled that its ambitions extend beyond the initial Act. Virtual asset derivatives are reportedly on the regulatory roadmap within the next year after the Act launches.

The 21-month compliance window for existing operators creates an interesting dynamic. Firms that invested in compliance infrastructure early will have a competitive advantage, while smaller operators may find the licensing costs prohibitive.

The stablecoin rules could also reshape how Taiwanese users interact with dollar-denominated tokens. By treating USDT and USDC as commodities rather than regulated stablecoins, the FSC has created a two-tier system that may encourage the development of domestically issued, NT-dollar-pegged stablecoins while keeping foreign tokens accessible through licensed channels.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.