The Core of Licensing Is Control Over Issuance Rights, Not Market Opening

[News] A Single Law Covers Full VASP Licensing, Stablecoin Reserve Assets, and Penalties for Unauthorized Activity

Source: Taiwan Enacts Comprehensive Crypto Regulation...Introduces Authorization Regime for Stablecoins

Taiwan’s Legislative Yuan passed the Virtual Asset Services Act on June 30. The law is Taiwan’s first comprehensive special act for virtual assets and legally defines seven types of VASP businesses, including exchanges and custodians. Each business must establish systems for management eligibility, internal controls, audits, and cybersecurity management.

Separate requirements were imposed for stablecoin issuance. To issue a stablecoin in Taiwan, both central bank consent and approval from the financial supervisory authority are required. Full backing by reserve assets, segregated trust management, regular audits, and information disclosure are also required.

Penalties for unauthorized operations are also severe. Violations can result in imprisonment of three to ten years and fines of up to NT$200 million. Existing businesses must apply within 12 months after implementation and obtain approval within 21 months.

[Commentary] The Core of Licensing Is Control Over Issuance Rights, Not Market Opening

Taiwan’s Virtual Asset Services Act should be read not simply as exchange regulation, but as a structure that places stablecoin issuance rights under the consent of monetary authorities. Classifying VASPs into seven business types is an exercise in mapping the industry. But the more important point is that stablecoin issuance requires both central bank consent and approval from the supervisory authority. This appears to be a design that allows private issuance while leaving the final judgment on monetary unity in the public domain.

Structurally, Taiwan has combined licensing with criminal penalties. Full reserve backing, segregated trust management, and regular audits are mechanisms that institutionally lock in an issuer’s ability to redeem. With heavy prison sentences and fines added for unauthorized operations, the path of growing a business first in a gray area and registering afterward becomes much narrower. As it moves from exploration to execution, Taiwan has chosen to draw boundaries before prioritizing speed.

Compared with Korea, Japan, and Hong Kong, Taiwan’s choice is closer to a middle path. Korea is still at the stage of restarting discussions on a Basic Digital Assets Act, while the Bank of Korea is separately pushing a unified ledger model. Japan is moving stablecoin businesses and payment pilots within the framework of the Payment Services Act. Hong Kong is restricting issuers through licensing while seeking to connect stablecoins with the payment infrastructure of an international financial hub. Taiwan made its law later than these jurisdictions, but its institutional scope is broad in that it regulated VASPs and stablecoins together in one step.

Still, a strong licensing regime does not itself guarantee market growth. If the number of issuers is limited and reserve requirements become strict, early players are likely to narrow toward banks or large financial groups. In return, user protection and international connectivity may be secured more quickly. For companies, this distinction will directly affect whether they see Taiwan as a test market or as a compliance-oriented issuance base.