On June 30, 2026, Taiwan’s Legislative Yuan passed the Virtual Asset Service Act on third reading, the island’s first dedicated legal framework for digital assets. The bill moves Taiwan from a narrow anti-money-laundering registration regime to a comprehensive licensing system covering exchanges, custody, transfers, stablecoin issuance, and investor protection.

The passage follows a fast legislative timeline: Legislator Ju-Chun Ko introduced a member draft on March 20, 2026; the Executive Yuan issued its own version on April 15; the Finance Committee completed review on June 3; and the full chamber passed the bill today.

Sources: Legislator Ju-Chun Ko’s resource page on the VASA (primary legislative record); Coin Edition reporting on stablecoin provisions.

What the Act Does

The Virtual Asset Service Act establishes the Financial Supervisory Commission (FSC) as the competent authority for all virtual asset service providers in Taiwan. The FSC is authorized to cooperate with foreign governments and international organizations on information exchange, technical cooperation, and investigation assistance.

The act defines several licensed VASP categories: exchange providers, trading platform providers, transfer providers, custody providers, and others as determined by the FSC. Each category is subject to licensing requirements, financial management rules, and operational standards set by the FSC through subordinate regulations.

Key operational provisions include:

• Licensing with a transition period: Existing VASPs registered under the AML regime have 12 months to apply for a license and 21 months to obtain one, with a possible 3-month extension.
• Token listing: Platforms must set their own listing review standards and procedures, then file listed assets with the FSC. The prior-approval bottleneck from earlier drafts was removed in favor of platform responsibility with regulatory filing.
• Customer asset protection: Customer assets must be separated from the VASP’s own assets. Anti-fraud and abnormal-flow controls are subject to proportionality requirements to prevent indefinite freezes on innocent users.
• Market integrity: Market manipulation is prohibited, with a carve-out for legitimate liquidity maintenance and slippage reduction measures.
• Victim recovery: When criminal proceeds are virtual assets, the default is to return or confiscate them in-kind rather than converting to cash.

The Stablecoin Question

The act includes a dedicated stablecoin framework but leaves the details to FSC subordinate regulations. Article 35 preserves flexibility with the phrase “unless otherwise provided by the competent authority” and requires the FSC to consult the Central Bank in setting stablecoin rules.

FSC Chair Peng Jin-long previously indicated that Taiwan’s first regulated stablecoin could debut in the second half of 2026, contingent on legislative progress and a six-month implementation buffer after subordinate rules are published. With third reading complete today, that timeline is now in motion.

Two significant questions remain unresolved. First, the peg: regulators have not decided whether Taiwan’s first stablecoin should be pegged to the US dollar or the New Taiwan dollar. Pegging to USD avoids complications from Taiwan’s rules restricting offshore NTD circulation, but also means Taiwan’s first stablecoin would not denominate in the domestic currency. Second, who can issue: while the draft law does not explicitly limit issuers to banks, the FSC and Central Bank currently favor financial institutions as the initial issuer class.

On the question of existing international stablecoins (USDT, USDC), Article 35’s flexibility language is intended to prevent abrupt cutoffs once the act takes effect. Platforms will not be required to immediately delist internationally circulating stablecoins while the FSC develops its supervisory framework.

The Legislative Architecture

Several design choices in the final act reflect debates during the Finance Committee review that are worth understanding for anyone planning to operate in Taiwan.

The act is risk-proportionate. Operating bonds and financial requirements vary by service category and business scope. Lower-risk businesses are not subject to the same thresholds as higher-risk ones. This was a direct response to concerns that a one-size-fits-all approach would shut out smaller participants.

The act is internationally aligned. The FSC is explicitly authorized to cooperate on FATF compliance, and attached resolutions from the Finance Committee review call for adherence to international standards on AML, sanctions, and information sharing.

The act is transition-aware. The 12/21-month licensing window for existing VASPs was designed to prevent a legal vacuum. Businesses that have operated under the AML registration regime have a defined path to the new framework without a forced shutdown period.

The Bitcoin Reserve Dimension

Separate from the VASA itself, a political conversation has been running alongside the legislative process. Legislator Ko — the primary sponsor of the VASA — has also argued that Taiwan should consider adding Bitcoin to its national reserves. Ko has pointed to Taiwan’s heavy concentration in US Treasuries (over 80% of approximately $600 billion in foreign exchange reserves) and questioned whether Taiwan can afford to wait while global central banks begin evaluating digital asset reserves.

Premier Cho Jung-tai has committed to releasing an updated assessment of Bitcoin seized in criminal cases. This is a separate policy track from the VASA but reflects the broader political context in which the act was passed: Taiwan is actively engaging with digital assets at both the regulatory and strategic levels simultaneously.

What It Means for Asia

Taiwan’s passage of the VASA adds another data point to the pattern of Asia’s most developed financial markets building out formal digital asset frameworks in 2025-2026. Hong Kong issued its first stablecoin licenses in April 2026. Singapore’s MAS framework has been operational since 2023. Japan’s Payment Services Act framework took effect in 2023. South Korea’s framework is in development. Taiwan now joins this cohort with a comprehensive law rather than piecemeal guidance.

The regional significance is structural: as more major Asian economies establish defined legal frameworks, the comparative advantage of operating in a regulated jurisdiction increases. Institutions that have been waiting for regulatory clarity before entering Asian digital asset markets now have more jurisdictions where that clarity exists.

The Sora Ventures Perspective

Taiwan is a market where Sora Ventures operates directly. The passage of the VASA creates a defined regulatory pathway for digital asset businesses in Taiwan for the first time. For portfolio companies and partners operating in or considering Taiwan, the key near-term question is not whether to engage with the FSC licensing process, but when and how, given the 12-month application window and the FSC’s timeline for publishing subordinate regulations.

The stablecoin framework’s development over the next six to twelve months will be particularly relevant for cross-border digital asset operations. Taiwan’s decision on the USD versus NTD peg, and on whether non-bank institutions can ultimately obtain stablecoin issuer status, will determine what kind of stablecoin infrastructure is viable in the Taiwan market.

 

Sources: Legislator Ju-Chun Ko’s VASA resource page, juchunko.com/en/act/virtual-asset-service-act/ (primary legislative record, June 30, 2026); Coin Edition reporting on stablecoin provisions, coinedition.com.