Taiwan Legislative Yuan Passes Cryptocurrency Regulation Act

Foresight News reports, according to the Taiwan Times, the Taiwan Legislative Yuan has passed a new law establishing a regulatory framework for cryptocurrency operations in Taiwan. The framework includes licensing requirements for Virtual Asset Service Providers (VASP) and stablecoin issuers, as well as penalties for fraud and market manipulation. Under the Virtual Asset Service Act, Virtual Asset Service Providers (VASP) must obtain approval from the Financial Supervisory Commission to operate and comply with requirements for internal controls, cybersecurity, and business continuity. VASPs that have completed anti-money laundering registration before the law takes effect will have 12 months to apply for a license and 21 months to secure approval from the regulatory authority. Stablecoin issuers will be required to maintain adequate reserve funds, which must be held in custody by domestic financial institutions and segregated from common equity. If the issuer enters bankruptcy proceedings, these reserve funds will be protected from claims by other creditors. Issuers must also undergo regular audits and are prohibited from paying interest or other returns to holders. The act stipulates that unauthorized operation of Virtual Asset Service Providers (VASP) or issuance of stablecoins can result in a maximum prison sentence of seven years and fines of up to NT$100 million (approximately $3.14 million). Fraud involving virtual assets, or actions manipulating prices, supply, or demand, can result in prison sentences ranging from three to ten years and fines between NT$10 million and NT$200 million. Lawmakers also passed a non-binding resolution requiring the Financial Supervisory Commission to submit a plan within one year to allow virtual asset companies to offer cryptocurrency derivatives.