Taiwan Passes Crypto Law to Strengthen Market Oversight and Investor Protection

Highlights:

• Taiwan just passed a major law bringing crypto exchanges, custody firms, and lenders under clear regulation.
• Crypto platforms must now keep customer money separate from company funds, and stablecoins need official approval.
• Fraud or price manipulation can now mean up to ten years in prison and steep fines.

Taiwan has passed a new crypto law that will bring virtual asset service providers (VASPs) under wider regulation. The Financial Supervisory Commission, or FSC, said on June 30 that the Legislative Yuan passed the Virtual Asset Service Act in its third reading. The law gives Taiwan a clearer system for supervising crypto firms and stablecoin issuers.

The new law moves Taiwan’s crypto rules beyond anti-money laundering checks. It creates a broader framework for business operations, customer protection, market order, and stablecoin management. The FSC said the goal is to build a healthier virtual asset market and better protect traders.

🚨NOW: TAIWAN PASSES KEY CRYPTO FRAMEWORK, ENDING REGULATORY UNCERTAINTY

Taiwan has approved a comprehensive legal framework for crypto, requiring exchanges and stablecoin issuers to obtain licenses before operating while introducing stricter rules on reserves, cybersecurity,… pic.twitter.com/cILLGEcIus

— Coin Bureau (@coinbureau) July 1, 2026

Taiwan Requires Crypto Firms to Separate Customer Assets

The law clearly defines the types of virtual asset service providers, also known as VASPs. These include crypto exchanges, trading platforms, transfer service providers, custody firms, underwriting firms, lending firms, and other related service providers.

These firms will need to follow rules on financial reporting, internal controls, audits, cybersecurity, and customer asset protection. They will also need proper systems for listing and removing virtual assets from their platforms. A key part of the law is the separation of customer assets. Crypto firms must keep customer funds separate from company funds. This rule is important because it can reduce risk if a platform faces financial problems.

The law also sets standards for company leaders and staff. Firms must make sure that their responsible persons and business employees meet proper requirements before handling regulated crypto services. Taiwan is also setting clear rules for stablecoins.

Under the new law, any stablecoin issued inside Taiwan must first receive approval from the central bank and permission from the FSC. Stablecoin issuers must also maintain full reserve assets, place those reserves in trust, carry out regular checks, and disclose key information. These rules are aimed at making stablecoins safer and more transparent. If a stablecoin claims to be backed by real assets, users need clear proof that the reserves are available.

Taiwan Sets Penalties and Transition Timeline for Cryptocurrency Firms

The law also targets unfair activity in the crypto market. It bans false, fraudulent, and price-manipulation behavior. Anyone who breaks these rules may face three to ten years in prison. They may also face fines from NT$10 million to NT$200 million.

Existing firms will get time to adjust. The law’s official start date will be set later by Taiwan’s Executive Yuan. After the law takes effect, existing VASPs that have completed anti-money laundering registration must apply for FSC approval within 12 months. They must receive permission and obtain a license within 21 months. A one-time three-month extension may be allowed if needed.

The FSC said it will continue preparing supporting rules for the new law. In addition, the FSC also plans to consult with industry bodies and other stakeholders before the completion of the entire regulatory framework. This new legislation is a big step for the development of the cryptocurrency market in Taiwan.