Taiwan Enacts Comprehensive Crypto Licensing Law

The Legislative Yuan cleared the bill on June 30, mandating that exchanges, custodians, and lending platforms secure Financial Supervisory Commission (FSC) approval to operate. Firms currently registered for anti-money laundering compliance face a 12-month window to apply for these new licenses, with a total of 21 months to achieve full regulatory alignment. Failure to meet these requirements will result in a total prohibition of business operations within the territory.

Stablecoin issuers face particularly stringent requirements, necessitating joint approval from both the FSC and the central bank. These issuers must maintain full reserve backing, keep assets in trust, and submit to regular independent audits. The legislation also introduces severe criminal penalties for non-compliance; unlicensed operations can trigger up to seven years in prison, while market manipulation carries a maximum sentence of ten years and fines reaching NT$200 million, or approximately $6.28 million.

Regulatory Oversight and Compliance

The act encompasses seven categories of service providers, demanding strict adherence to cybersecurity, financial reporting, and internal control protocols. By aligning its standards with jurisdictions like Japan, South Korea, and the European Union, the government aims to foster sector stability while curbing illicit activities. The FSC is currently drafting the specific sub-rules required to operationalize the law, with plans to consult industry stakeholders before the final cabinet-mandated effective date.