Taiwan’s new crypto law gives banks the first real stablecoin advantage

Here is the latest from the digital-asset markets: Taiwan has moved stablecoin issuance into a licensing test for supervised financial infrastructure. The Legislative Yuan passed the Virtual Asset Service Act on its third reading on June 30, establishing a dedicated framework for crypto trading platforms, stablecoin issuers, and other virtual asset service providers. The practical consequence is a stablecoin market where approval, reserves, domestic custody, audits, and no-yield limits determine who can scale before open-market crypto issuers have much room to compete.

Under the new framework, stablecoin issuers must maintain full reserve backing, hold segregated reserve assets in trust through domestic financial institutions, undergo regular audits and avoid paying interest or other returns to holders. Those requirements shift the competitive question from who can launch a token fastest to who can satisfy approval, reserve, custody and disclosure obligations at institutional scale. That makes Taiwan’s stablecoin market a race with a supervised starting line.

Market Dynamics

The early advantage appears to sit with banks, trust providers, auditors, custody platforms and compliance-heavy virtual asset firms that can connect crypto rails to supervised domestic finance. Related Reading Taiwan's FSC outlines regulatory path for bank-issued stablecoins Taiwan's stablecoin framework aims to bridge the gap between fiat and digital currencies, fostering safe and cheap cross-border transactions. Jan 24, 2025 Assad Jafri From AML registration to stablecoin supervision Taiwan already had an in-force anti-money laundering registration regime for virtual asset service providers.

’s prior profile of the Taiwan VASP AML Registration Regime treated that system as an AML and counter-terrorist financing framework. The new act moves beyond that baseline. The Executive Yuan’s April draft context described the bill as a comprehensive framework for VASPs and stablecoin issuers, aimed at financial soundness, segregated custody, unfair trading controls, and market stability.

The passage report says VASPs will need approval from the Financial Supervisory Commission before operating, along with internal controls, cybersecurity, and business continuity requirements. AML registration asks whether a firm has met baseline controls to operate in a monitored sector. A licensing and supervisory framework asks whether the business model, capital structure, customer protection setup, and operating systems are sufficient to be permitted in the market.

Market Impact

Related Reading Taiwan introduces bill aiming to create regulatory framework for crypto The bill's primary goal is to establish rules for virtual asset service providers to protect investors and maintain financial stability. Oct 29, 2023 Assad Jafri For stablecoins, the difference is sharper. A crypto issuer can normally present a stablecoin as a product.

Taiwan’s law treats domestic issuance as a supervised activity linked to reserve quality, custody location, audits and financial stability. That pulls the product away from pure crypto distribution and closer to the regulated plumbing of payments. Existing VASPs that completed AML registration before the law takes effect will have 12 months to apply for licenses and 21 months to obtain approval, according to the passage report.

The timing should be tied to the law’s effective date and the next layer of rules, which still need to be set by the government. The stablecoin provisions decide who can plausibly compete. Focus Taiwan reported that issuers will need full reserve backing, with segregated assets held in trust by domestic financial institutions.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.