FSC Releases Virtual Asset Service Act for Crypto Regulations in Taiwan

The draft ‘Virtual Asset Service Act’ has been released by Taiwan’s Financial Supervision Commission (FSC) as of March 26, 2025. This is a significant step toward formalizing cryptocurrency regulations in the country. This article would describe a detailed examination of the provisions of the draft, its repercussions to the crypto industry, and the broader context based on available information from more recent reports and regulatory announcements.

Largely as a response to developments in the rest of the world and the increasing need for harmonizing innovation with consumer protection, Taiwan has been continually enhancing its oversight over virtual assets. The Financial Supervisory Commission is an independent agency under the Executive Yuan which regulates the financial markets, including securities, banking, and insurance, according to its official site (FSC Website). There has been an introduction of VASP registration regulations by Taiwan in November 2024 before this draft and it was further expanded with anti-money laundering provisions compliance, observed in Lexology. The draft ‘Virtual Asset Service Act,’ which was published on March 25, 2025, represents a step further toward comprehensive regulation aligned with that of other countries.

Licensing Regime for Virtual Asset Service Providers (VASPs):

The act proposes a licensing requirement for VASPs, including entities like virtual asset exchangers, trading platforms, transferors, custodians, and underwriters. This is a step beyond the existing registration scheme with particular standards for organizational structure, capital, and personnel qualifications. This step should ensure that VASPs operate with sufficient financial stability and professionalism, thereby reducing some risks to their customers. These standards are discussed in detail by Lee, Tsai & Partners, which refer to parallel requirements under existing regulations, which could be interpreted to suggest that the new draft builds on those.
Stablecoin issuance by Banks:

One remarkable feature is that banks are permitted to issue stablecoins pegged to the New Taiwan Dollar with FSC consent for issuances that meet set criteria. This is Taiwan’s first as per ChainCatcher, wherein FSC Chairman Peng Chin-long has stated that stablecoins will serve as a bridge between fiat currency and virtual currency, providing investors with a trading entry point. The draft regulates reserve requirements to guarantee stable backing (as per Lexology) and also regulation in cooperation with the central bank in meeting issues of monetary policy, including the question of distinguishing from CBDCs.

Market Integrity and Investor Protection Measures:

The FSC is empowered to strengthen market integrity via inspections, compliance enforcement, and penalties for non-compliance. According to crypto.news, this activity is also to prevent market manipulation, fraud, and other illicit endeavors. Emphasis on investor protection fits neatly into the wider regulatory aim of Taiwan, designed to restore trust in the virtual asset market.