Future Business Opportunities, Models, and Prospects for Virtual Assets in Taiwan: a Legal and Regulatory Perspective

A Brief History of Virtual Asset Regulation in Taiwan

The regulation of virtual assets has been a topic of discussion in Taiwan for quite some time. As early as 2013, Taiwan’s Central Bank and Financial Supervisory Commission (FSC) jointly issued a press release stating that Bitcoin is not a currency, but rather a type of virtual commodity.

Later, during the global ICO (initial coin offering) boom, the core regulatory question worldwide was whether tokens issued through ICOs should be considered securities and thus be subject to government regulation. Taiwan was no exception.

Subsequently, Taiwan brought virtual assets under the anti-money laundering (AML) regulatory framework, with the FSC designated as the competent authority. Under this framework, virtual asset service providers (VASPs) are required to register with the FSC before providing relevant services; offering such services without registration may result in criminal liability.

In addition, due to the rapid evolution of virtual assets, the Taiwan government has also been introducing related policies. This suggests that in the foreseeable future, Taiwan’s virtual asset sector may undergo further changes. The following discussion considers the potential developments and opportunities in Taiwan’s virtual asset industry based on current and upcoming policy and regulatory initiatives.

Draft Virtual Asset Services Act

In recent years, following the collapse of FTX in the U.S. and concerns about money laundering and fraud involving virtual assets, calls have intensified for a dedicated law to regulate virtual assets. In March 2025, the FSC released the Draft Virtual Asset Services Act (Draft Act).

The Draft Act introduces a licensing regime, meaning that no one may engage in virtual asset business without FSC approval and licensing. It also includes requirements such as minimum capital and personnel. Under this proposed framework, virtual asset services would formally become part of the financial regulatory system, on par with banking, securities, and insurance.

Compared to the existing system, the Draft Act has two main distinctive features: (i) clarification of the status of stablecoins; and (ii) permitting financial institutions to concurrently engage in virtual asset services.

Stablecoins

The Draft Act defines stablecoins as “virtual assets pegged to the value of one or more fiat currencies, designed to maintain price stability.”

Under Article 34 of the Draft Act, stablecoin issuers must obtain FSC approval before issuing stablecoins in Taiwan. The FSC must consult with the Central Bank before granting the approval. VASPs may not provide services involving stablecoins that have not been approved for issuance or trading by the FSC. The FSC will prescribe the rules for application procedures and other compliance requirements for stablecoins. Also, relevant qualifications, procedures, permissible types of stablecoins, use cases, revocation conditions, and other related rules will be jointly determined by the FSC and the Central Bank.

In addition, Article 35 of the Draft Act requires stablecoin issuers to (i) maintain sufficient reserve assets deposited with a domestic financial institution, (ii) segregate such reserves from the issuer’s own assets and subject them to periodic audits, (iii) hold adequate reserves (including mandatory deposits) if issuance exceeds a certain threshold, and (iv) comply with Central Bank regulations in foreign exchange-related aspects of issuance.

The above raises the question: can USDT and USDC continue to be traded on Taiwanese virtual asset exchanges? In principle, they would need to pass review under these new rules. There are also active discussions about whether Taiwan’s financial institutions should issue their own stablecoins. The Central Bank has previously stated that it views stablecoin issuance as similar to the current e-payment system, since both share characteristics of money and payment instruments. From a regulatory perspective, the key issue is whether the stablecoin framework should integrate with or remain distinct from e-payment rules. From a business perspective, financial institutions must consider how stablecoins would align with—or differentiate from—their existing business models adopted for existing e-payment methods.

Financial Institutions Providing Virtual Asset Services

Back in early 2014, the FSC issued a press release clarifying that financial institutions could not provide Bitcoin ATM services. It stated that Bitcoin was not a currency but rather a “virtual commodity,” and therefore could not serve as a generally accepted payment method. Accordingly, banks and other financial institutions were prohibited from accepting, exchanging, or offering ATM services for Bitcoin.

More than a decade later, given the growth of the industry, the Draft Act now proposes to allow financial institutions to engage in virtual asset services with FSC approval.

Generally, many derived virtual asset services—such as lending, asset management, and derivatives—are modeled after traditional financial products, which are areas of expertise of financial institutions. In the past, restrictions were imposed largely due to the fact that the underlying assets were virtual assets, rather than fiat money. By incorporating virtual asset services into financial regulation under a licensing regime, the government may feel greater confidence in allowing banks and financial institutions to participate, potentially bringing the sector into the “mainstream”.

Additionally, with the recent global trend of “Bitcoin treasury” strategies, there has been active discussion in Taiwan. Local banks and financial institutions already have extensive relationships with corporate and high-net-worth clients. If banks and financial institutions can operate in the virtual asset space, they could meet clients’ growing demand for new asset classes and strengthen customer retention.

Custody of Virtual Assets: Pilot Programs for Financial Institutions

Given the government’s intention to allow financial institutions to provide virtual asset services, custody is a particularly important area. Once individuals and institutions begin holding virtual assets, secure storage becomes essential. While custody services already exist under the current AML framework, the Draft Act may allow financially stronger institutions to handle custody, potentially enhancing government trust in the system.

In November 2024, the FSC launched a pilot program for virtual asset custody services. By August 2025, news reports indicated that four banks had been approved to participate. This initiative is seen as preparation for the full rollout of licensed virtual asset services under the Draft Act. For banks, it also provides an opportunity to gain hands-on experience and explore new business opportunities in this space, without sacrificing cybersecurity.

Real-World Asset (RWA)

Following the ICO wave indicated above, Taiwan introduced rules for STOs (security token offerings). However, due to restrictive conditions, the market remained limited. Today, RWA tokenization is trending globally, and Taiwan is exploring its development.

In 2024, the FSC partnered with the Taiwan Depository & Clearing Corporation (TDCC) and several financial institutions to form an “RWA Tokenization Working Group”. Members include financial institutions and technical support teams. The group focuses on tokenizing domestic bonds, foreign bonds, and funds, conducting proof-of-concept (POC) testing for feasibility in Taiwan’s financial markets.

According to the FSC, the working group submitted an interim report in January 2025 and is expected to deliver a final report by the end of 2025. The goal is to improve the efficiency of securities trading and settlement through tokenization.

Bitcoin treasury strategies

As mentioned above, Bitcoin treasury strategies—where listed companies purchase and hold Bitcoin as part of their reserves/assets—have been increasingly discussed in Taiwan. A key question is whether listed Taiwanese companies could follow the example of U.S.-based MicroStrategy in adopting such strategies.

In Taiwan, when listed companies invest in other types of assets, they are typically required to undergo a more rigorous process, such as complying with internal corporate governance rules, having valuations recognized by their certified public accountants, etc. While virtual assets seem to be gradually moving into the mainstream, chief investment officers and chief financial officers of listed companies in Taiwan might not yet have a clear understanding of them.

Moreover, investing in and holding virtual assets also involves custody issues. Do companies already have established procedures and policies for safeguarding such assets? Have they implemented effective internal control systems related to custody? If these aspects are not properly addressed, and the company hastily invests, any sharp decline in value—or worse, loss of assets due to cybersecurity incidents—could expose relevant executives and management to potential legal liability for breach of fiduciary duty. Not to mention the risk of triggering the prohibition of backdoor listing if large amount of virtual assets would be purchased, among other factors.

For these reasons, the matter must be approached with caution.

Conclusion

It is clear that virtual assets in Taiwan have gone “mainstream”. With growing attention from traditional players and investors, alongside evolving regulations, the virtual asset sector is poised for significant transformation. These changes are expected to create new business opportunities, models, and innovations in Taiwan’s virtual asset market.