Taiwan's Legislature has passed a dedicated Virtual Asset Service Act, giving the country its first broad statutory framework for crypto businesses and stablecoin issuers. The law moves virtual asset service providers from a narrower anti-money-laundering registration model toward a licensing regime overseen by the Financial Supervisory Commission.

Under the act, VASPs must obtain FSC approval before operating and follow rules covering internal controls, cybersecurity, customer asset custody, and business changes. That makes licensing a gatekeeper for exchanges and other covered crypto service providers, rather than a compliance step handled after launch.

The stablecoin provisions are the most significant market change. Issuers must receive approval from regulators, maintain full reserve backing, keep reserve assets separate from their own property, and use domestic financial institutions to hold those reserves in trust. Verified reporting also says stablecoin issuers are barred from paying interest or other returns to holders.

The law adds criminal penalties for firms and individuals that operate without authorization. Unlicensed VASP activity or stablecoin issuance can carry prison terms of up to seven years and fines of up to NT$100 million. Fraud or market manipulation involving virtual assets can bring three to 10 years in prison and fines as high as NT$200 million.

For Taiwan's crypto market, the shift is less about approving any single product than about defining who can legally operate. The next practical test will be how quickly regulators turn the new law into licensing rules, reserve standards, and transition timelines for existing platforms.