The Executive Yuan has approved the draft of the “Virtual Assets Services Act,” which will regulate service providers into 7 categories and adopt a licensing-and-permit system. The new law will tightly regulate asset custody and explicitly prohibit issuing stablecoins with interest. If fraud is involved, the maximum penalty will be 200 million Taiwan dollars. With this announcement, Taiwan’s crypto industry is set to enter a compliant era.
- This article was updated and revised on 2026/4/8 to the Executive Yuan–approved draft version
The draft of the Virtual Assets Services Act has passed the Executive Yuan—here’s a quick guide to the key points in one go
Taiwan’s cryptocurrency industry has finally ushered in a clear regulatory era! After the Financial Supervisory Commission announced a preliminary draft last year, the Executive Yuan****has approved the draft amendments to the “Virtual Assets Services Act” in early April this year and will send it to the Legislative Yuan for review. The goal is to improve the development and management of Taiwan’s virtual asset business, protect the rights of traders, and promote financial-technology innovation.
Compared with the 2025 version, the Executive Yuan’s approved version is stricter in both penalties and management! After reading through the complex legal provisions, Crypto City has listed out 4 major takeaways to help readers quickly understand them. If you want to see the latest full draft content, you can check out this “Virtual Assets Services Act” PDF file.
4 major takeaways from the draft of the Virtual Assets Services Act
Takeaway 1: Virtual asset service provider classification and license application
The draft of the “Virtual Assets Services Act” clearly stipulates that virtual asset service providers must obtain approval from the competent authority according to their respective types, and can only operate after receiving the relevant license (a license plate). Those that have not obtained approval and been issued a license may not conduct the respective virtual-asset business.
In addition, the revised draft also explicitly states that businesses “may not operate unless they join an industry association,” implementing industry self-discipline. Traditional financial institutions may also, after obtaining approval, “engage in” virtual asset business as a “concurrent” activity, and are exempt from certain provisions.
The Financial Supervisory Commission will categorize virtual asset service providers into 7 types:
- Virtual asset exchange dealers: Operate the exchange of virtual assets with New Taiwan dollars, foreign currencies, and currencies issued in Mainland China, Hong Kong, or Macau, along with related services, or the exchange of virtual assets with other virtual assets and related services.
- Virtual asset trading platform providers: Operate the business of a centralized virtual asset trading market as a virtual asset exchange dealer.
- Virtual asset transfer dealers: Operate the transfer of virtual assets and related services, including related services for virtual asset payments.
- Virtual asset custodians: Operate the custody or management of virtual assets or the tools used to control virtual assets, and related services.
- Virtual asset underwriters: Operate the issuance or sale of virtual assets and related services.
- Virtual asset lending dealers: Operate by acquiring virtual assets and agreeing to return or pay back the same or a higher quantity or value of virtual assets, along with related services.
- Other virtual asset service providers: Operate other virtual asset services approved by the competent authority
Image source: Made by Crypto City. Virtual Assets Services Act draft quick guide key points: Virtual asset service provider types, licensing and permits
License and permit application deadline
For the transition period that businesses care about most, the Executive Yuan version includes clearer provisions: businesses that have already completed anti-money-laundering registrations must submit their applications within 9 months after the enactment of the law, and obtain the license within 18 months. If they fail to apply by the deadline or do not pass, they may not continue operating.
Regulations for overseas currency businesses to land locally
As for overseas virtual asset service providers (e.g., overseas crypto exchanges, etc.), if they want to establish a branch or office in Taiwan, they must obtain approval from the competent authority, be issued a license, and must complete company or branch establishment registration in Taiwan.
Takeaway 2: Management and oversight framework for virtual asset service providers
The Financial Supervisory Commission also referred to regulations from the EU MiCA and places such as Japan and Singapore, and has proposed stringent requirements for virtual asset service providers. Crypto City has listed the following key points:
Total liabilities
The total amount of external liabilities of a virtual asset service provider may not exceed the specified multiple of its net worth; its total current liabilities may not exceed the specified percentage of its total current assets. However, this does not apply to financial institutions that concurrently engage in the business; the specific multiples and percentages will be determined by the competent authority.
Internal controls and administrative fines
Service providers should establish internal control systems and cybersecurity-related requirements. If internal controls are poor, financial reports are not filed as required, or deposit/withdrawal and listing/delisting reviews are not properly implemented, they will face an administrative fine ranging from 300,000 New Taiwan dollars to 6,000,000 New Taiwan dollars, and repeat penalties may be imposed.
Custody of customer assets
Virtual asset service providers’ assets held for customers must be kept separately from the provider’s own property in accordance with the competent authority’s prescribed methods. Customer assets include the customer’s virtual assets, statutory currency, and other assets. A creditor of a virtual asset service provider may not make any request or exercise other rights against the customer assets that the provider is holding.
In the event of bankruptcy, the customer assets do not form part of the bankrupt estate (note). Unless permitted by the customer’s instructions, setoff of expenses and debts in accordance with law, or approval by the competent authority, customer assets may not be used. For customer virtual assets held by a virtual asset custodian, the property rights belong to the customer and may not be agreed to be transferred to another party. Customer virtual assets must not be mixed for custody with the custodian’s own virtual assets.
- Note: “Bankrupt estate” refers to all assets that a company holds before the bankruptcy proceedings conclude, including movable property, immovable property, property claim rights, etc., all of which fall under the bankrupt estate.
Customer statutory currency deposit dedicated accounts
With the customer’s consent, a virtual asset service provider may handle statutory currency retained in relation to virtual asset business in a dedicated deposit account opened with a financial institution in the same currency. The provider must either deliver the statutory currency retained for the customer to a trust or obtain full performance security from a bank. If statutory currency is retained for the customer, the account reconciliation rules applicable to virtual asset custodians shall apply.
Periodic review reports
Virtual asset service providers must regularly file and publish with the competent authority financial reports that have been audited, attested, or reviewed and signed by certified public accountants. The filing procedures, publication items, and formats are determined by the competent authority.
Virtual asset custodians must, for customer assets they custody, set up recurring account-reconciliation measures and appoint certified public accountants to issue reports, and then file and publish them with the competent authority.
Virtual asset listing and delisting review
Virtual asset exchange dealers should publish the offering documentation (whitepaper) describing the virtual assets they provide exchange services for. If the virtual asset has not, in principle, been compiled and published with the offering documentation prepared in accordance with the competent authority’s requirements, then the virtual asset exchange dealer may not provide exchange services for that virtual asset.
Virtual asset trading platform providers should establish review standards and review procedures for listing and delisting. For virtual assets that have not been agreed to by the competent authority, virtual asset trading platform providers may not provide trading-platform services involving that virtual asset.
Image source: Made by Crypto City. Virtual Assets Services Act draft quick guide key points: Compliance framework and oversight for virtual asset service providers
Takeaway 3: Regulations for issuing stablecoins in Taiwan
If a business wants to issue stablecoins within Taiwan, it must obtain approval from the competent authority, and the competent authority will consult the central bank’s opinion. The Executive Yuan version adds extremely strict red lines for stablecoins:
- Ban on paying interest and returns: A stablecoin issuer may not pay any form of interest or returns, and must issue and redeem at face value; the U.S.’ current stablecoin regulations in the “BILL/Act” also include this requirement.
- Reserve requirements and central bank penalties: Issuers must maintain sufficient reserve assets and store them independently. If reserves are insufficient, the central bank will impose a penalty on the deficient portion by charging “interest at an annual rate of 5%” based on the minimum lending rate.
Takeaway 4: Regulations on 8 major penalties—heavy penalties for fraud, market manipulation
The draft of the “Virtual Assets Services Act” imposes extremely severe penalties for acts such as sanctioning fraud and market manipulation. The Executive Yuan version also significantly expands the practical prosecution and pursuit mechanisms:
- Fraud or manipulation provisions: Sentenced to imprisonment for a term of not less than 3 years and not more than 10 years, and may also be fined between 10 million and 200 million Taiwan dollars.
- Voluntary confession and confession leading to sentence reduction: For fraud or manipulation, if the offender voluntarily confesses or confesses during the investigation, and compensates the victims for the full amount within 6 months, the sentence may be reduced or exempted—making it easier for prosecutors to trace upstream sources.
- Operating without permission or issuing stablecoins: Sentenced to imprisonment of up to 7 years, and may also be fined up to 100 million Taiwan dollars.
- Illegally using customer assets: The responsible person will be sentenced to imprisonment of up to 5 years, and may also be fined up to 50 million Taiwan dollars.
- Corporate joint penalty mechanism: If an employee commits crimes such as operating without permission or unlawfully using assets, in addition to penalizing the individual, the company (legal entity) will also be fined the same high amount—for example, up to 100 million or 50 million.
- Enhanced penalties for substituted labor service: If the fine is 50 million Taiwan dollars or more, the term for substituted labor service is increased to no more than 2 years; if it is 100 million Taiwan dollars or more, it is increased to no more than 3 years.
- Forfeiture of criminal proceeds: It is expressly provided that if criminal proceeds are obtained by the offender or a third party, they shall be confiscated except for returning them to the victims.
- Falsification, concealment, and misuse of names: Applying with false information, failing to submit reports, etc., carry imprisonment of not more than 3 years or a fine of not more than 2.4 million; using a similar name by someone who is not a service provider carries imprisonment of not more than 1 year or a fine of not more than 1.2 million.
Image source: Made by Crypto City. Virtual Assets Services Act draft quick guide key points: Supervision and penalties for virtual asset service providers
Dispute over the Virtual Assets Services Act: Can it balance protection + innovation?
The Financial Supervisory Commission stated that, given that the United States, the European Union, Japan, South Korea, Hong Kong, and other places have increasingly issued regulations related to virtual assets, international views on virtual asset regulation have gradually reached a consensus. Therefore, establishing a dedicated act is necessary to ensure the healthy development of Taiwan’s virtual asset business, protect investors, and balance financial-technology innovation.
After undergoing revisions, this draft of the “Virtual Assets Services Act” has finally been formally approved by the Executive Yuan. The industry is now actively discussing it. There are positive views saying the release of regulations will help the industry develop in a healthy and orderly manner, while negative views argue that the rules are extremely strict and may stifle startups.
However, it is worth noting that this time the Executive Yuan version has also specifically added provisions for “innovation experiments” and “international cooperation.” It expressly states that businesses may apply to conduct innovation experiments (regulatory sandboxes), and the competent authority is authorized to carry out cross-border information exchange.
Overall, the enactment of the “Virtual Assets Services Act” represents Taiwan’s crypto industry moving from the era of frontier development toward a more mature era of compliant regulation, and businesses are also bound to face a period of unavoidable pain.
News related to Taiwan’s virtual asset industry
- Planning to issue a New Taiwan dollar stablecoin? Capital Layer cooperates with Dunyang Technology—blockchain settlement will be introduced into banks
- Another lawmaker proposes a Bitcoin and stablecoin reserve strategy! Yang Chin-long: Current stance unchanged, but time and circumstances will change
- Can Taiwan’s stablecoins earn interest? The Legislative Yuan submits a bill/report on interest-bearing stablecoin legislation systems; the Financial Supervisory Commission has provided a preliminary response
- Binance intends to land in Taiwan! Businesses worry about impacting local crypto platforms—will PRC-linked backgrounds affect national security?
