Taiwan Is Preparing Its First Regulated Crypto Stablecoin

Taiwan advances its first regulated stablecoin with a cautious rollout, focusing on clear rules, strong reserves and careful peg selection.

Taiwan is moving toward the release of its first regulated stablecoin. Lawmakers and regulators are finalising the Virtual Assets Service Act, and the timetable now points to a launch window in the second half of next year. 

Officials say the project will move through a slow path rather than a hurried rollout. Taiwan sees this moment as an important step for its digital asset market, which has operated under scattered oversight for years.

Stablecoin plans and the new law

The Virtual Assets Service Act serves as the base for the stablecoin framework. Taiwan wants to replace its current patchwork of rules with a clear and consistent structure. The upcoming law will focus on licensing requirements, audits and risk controls for all service providers.

Officials intend to follow a staged approach. After the Act passes, authorities are planning a six-month pause before any stablecoin activity begins. 

This gives agencies time to write standards, create review systems and teach issuers how to meet compliance rules. 

Regulators prefer this approach because they want a stablecoin market that operates under a complete set of safeguards from the start.

Stablecoin issuers face a cautious model

Authorities will not restrict issuance to banks. Even so, the FSC and Taiwan’s central bank have agreed that only established financial institutions will take the lead at first. 

Officials want issuers to have strong internal controls and enough capital to manage liquidity.

This cautious model aims to prevent early errors, and as Taiwan’s financial system tracks liquidity closely, regulators want to avoid shocks during the launch phase. 

The plan resembles the structure used in Europe’s MiCA framework, which sets out reserve rules, governance checks and public disclosures for stablecoin issuers. 

Taiwan intends to adopt similar standards for full reserve backing and strict segregation of assets. 

Stablecoin peg choice still unsettled

Officials have not yet decided whether the new stablecoin will follow the Taiwan dollar or the US dollar. Financial Supervisory Commission Chair Peng Jin-long said the choice will depend on market demand and liquidity management.

A Taiwan dollar peg would support local payments. Some firms have shown interest in digital TWD tokens that settle quickly and avoid card network fees. 

This said, a stablecoin tied to the local currency could also help domestic fintech platforms improve transfers.

A US dollar peg would also avoid challenges linked to Taiwan’s strict currency controls. 

The TWD cannot legally circulate offshore, and the central bank has long restricted attempts to use it outside the island. Thus, a stablecoin backed by local currency could raise a few issues if users try to send it abroad, since stablecoins often support cross-border settlement. 

Meanwhile, a USD peg may sidestep those worries and make it easier to use the token for international trades or remittances.

Regulators have said only that the decision will take time. They want to understand market behaviour and the financial demands of each option before they choose a peg.

Related Reading: Taiwan to Implement New Crypto Asset Regulations by 2025

Taiwan’s currency rules shape stablecoin choices

Taiwan maintains heavy controls on its currency. The TWD does not circulate beyond the island and the central bank monitors all outbound flows. 

These controls aim to prevent offshore pricing or unofficial trading. Because stablecoins often move across borders, the peg choice carries weight and a TWD-based token might clash with these long-standing controls. 

On the other hand, a USD-based token may raise fewer concerns for supervisors who want to preserve the current setup.

Officials have not stated how they plan to monitor cross-border flows if they choose a TWD stablecoin. 

This makes it one of the most sensitive questions around the project. The FSC has said only that reserve rules and strong checks will form the core of the framework.

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