Taiwan Tightens Crypto Regulations With New Licensing and Compliance Law

Key highlights:

• Taiwan introduced a new crypto regulation framework
• The new rules mandate that crypto exchanges and firms register with the FSC to obtain a license
• Taiwan’s crypto market is now aligning with the global regulatory standards

Taiwan has taken a critical step in tightening its grip on the country’s crypto regulation. The Legislative Yuan reportedly approved a new law that brings stringent licensing and compliance requirements for crypto platforms.

According to Taiwan’s new crypto regulation, crypto exchanges and other virtual asset service providers should secure regulatory approval before providing services in the country. 

By introducing tougher standards for cybersecurity, risk management, and customer protection, the lawmakers intend to foster crypto growth while ensuring security.

Taiwan launches new crypto regulation

A press release on Tuesday revealed that Taiwan’s legislature has passed the Virtual Asset Service Provider Act, marking a major milestone in the country’s crypto regulation space. This marks Taiwan’s first comprehensive legal framework for businesses related to cryptocurrencies and stablecoins.

As noted by the lawmakers, the new crypto regulation mandates exchanges and stablecoin issuers to obtain a license from the Financial Supervisory Commission (FSC). 

These licenses allow companies to operate legally in Taiwan. If violated, the companies will be forced to face tougher penalties of up to $3.14 million and seven years in prison.

Previously, crypto firms were only required to register for anti-money laundering (AML) compliance. Now, the rules have strengthened as part of the country’s efforts to address increasing crypto-related threats. 

As per the latest crypto regulation move, companies are required to strengthen cybersecurity, enhance internal governance and risk management, distinguish between customer funds and company assets, and follow stricter reporting and operational standards.

Unveiling the 21-month transition window

Despite tightening the crypto regulation, the lawmakers have also provided a transition window for the already operating digital asset companies. The firms that have already completed AML registration procedures in the country will have a temporary regulatory relief. 

They don’t need to comply immediately with the new rules, but will get a 21-month transition period to meet the licensing standards.

While the companies have 12 months to submit their license applications to the FSC, they can secure the approval by up to 21 months. In addition, the FSC would also grant a one-time extension of up to three months if a company needs extra time.

If a company fails to fulfil these requirements, it will no longer be able to operate in Taiwan. The transition period is provided to make sure that the companies are getting enough time to adjust to the new crypto regulation. 

But it will not allow platforms to delay or bypass compliance, as the lawmakers intend to bring all crypto companies under full regulatory oversight.  

Taiwan crypto regulation aligns with global standards

It is worth noting that the new crypto regulation of Taiwan comes in line with global regulatory standards. With a full licensing regime, the country intends to create a more transparent and safer crypto market. This makes the framework closer to that of growing crypto markets in Europe, Japan, and South Korea.

The current crypto regulation is built on the foundation of the Virtual Asset Service Act draft prepared by the FSC in 2025. Now the bill has been passed by the lawmakers and will take effect once President Lai Ching-te signs it into law.