Taiwan Moves to Integrate Cryptocurrency into National Economy with New Laws
Taiwan is setting its sights on becoming a central player in the global crypto landscape.
The country is preparing to introduce a law in June 2025 that will reshape its approach to digital assets.
The proposed legislation is designed to incorporate cryptocurrency into Taiwan’s economic framework, opening doors for banks to issue their own stablecoins and for crypto trading platforms to operate under a clear regulatory structure.
Stablecoins Issued by Banks to Bridge Fiat and Crypto
A key component of the new law is the provision that allows local banks to issue stablecoins.
These digital assets, which will be pegged to Taiwan's own currency, the New Taiwan Dollar (NTD), aim to make the transition between fiat and crypto smoother for investors.
Peng Jinlong, Chairman of Taiwan’s Financial Supervisory Commission (FSC), explained that stablecoins would act as a bridge, enhancing the accessibility of crypto markets.
Local stablecoins will be jointly managed by Taiwan's central bank to ensure their stability and compliance with regulations.
Central Bank of the Republic of China (Taiwan)
FSC to Tighten Control on Virtual Asset Service Providers (VASPs)
In an effort to prevent illegal activities, the FSC is also introducing stricter oversight on Virtual Asset Service Providers (VASPs).
The new rules, which came into effect in January 2025, require all VASPs to comply with anti-money laundering (AML) protocols.
These firms must also submit annual risk assessment reports to maintain their operating licenses.
The FSC has set a deadline of September 2025 for VASPs to register under the new law, with non-compliance leading to heavy fines or even jail sentences.
Crypto Custody Services Pilot Program to Launch
In a bid to make the crypto sector more secure, Taiwan will initiate a trial for crypto custody services through local banks.
These services will allow institutional clients to store their digital assets safely.
If the pilot proves successful, the service could become a permanent feature by the end of 2025.
This initiative is expected to bolster confidence in crypto investments, positioning Taiwan as a leader in Asia's evolving crypto market.
Central Bank Criticises Unregulated Stablecoins
Despite these progressive moves, the central bank of Taiwan has raised concerns about the legitimacy of widely used stablecoins like Tether (USDT) and USD Coin (USDC).
Zhuang Xiuyuan, Director of Taiwan’s central bank, pointed out that these stablecoins are not backed by government-issued currencies, making them potentially unreliable.
He emphasised that all future stablecoins issued by local firms must first receive approval from the FSC, which will set out clear criteria regarding issuer qualifications, token reserves, and other essential factors.
Ongoing Challenges for Stablecoin Use in Everyday Transactions
Zhuang also acknowledged the hurdles that remain in enabling stablecoins for everyday transactions in Taiwan.
He highlighted concerns related to monetary policy and financial stability, which need further consideration by the central bank before stablecoins can be widely adopted for routine exchanges.
Taiwan’s upcoming legislation signifies a marked shift from its earlier, more cautious approach to cryptocurrency.
Historically, Taiwan has maintained a cautious approach towards cryptocurrencies.
As early as 2013, the FSC warned that Bitcoin was a highly speculative digital commodity.
By 2017, the government had even banned local banks from accepting or exchanging Bitcoin.
However, Taiwan is now shifting towards a stronger regulatory framework to foster the growth of the crypto industry, aiming to become a leading crypto hub in Asia.
By leveraging its financial infrastructure and tech-savvy population, it seeks to attract global investors.
If successful, Taiwan's approach could serve as a model for other countries balancing crypto growth with security.
XingChi
