Taiwan’s Cabinet Approves Proposed Draft Act Regulating Virtual Asset Services
Taiwan’s Cabinet has approved a draft act proposed by Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), to regulate virtual asset services (the “Draft Act”). The Draft Act aims to promote the sound operation and development of the virtual asset service industry, enhance the regulation of virtual asset services and trading markets, and protect the rights and interests of virtual asset traders in Taiwan. While the Cabinet-approved version remains largely consistent with the FSC’s 2025 proposal, it introduces the following new provisions applicable to stablecoin issuers:
• A stablecoin issuer must issue and redeem stablecoins at the face value of the pegged fiat currency and the issuer is expressly prohibited from redeeming at a discount.
• A stablecoin issuer is prohibited from refusing a holder’s redemption request except as permitted under other laws or circumstances consistent with FSC regulations.
• A stablecoin issuer is prohibited from paying any form of interest or yield to stablecoin holders.
• A stablecoin issuer is required to maintain full reserve assets, held in custody with local licensed financial institutions. Such assets shall be segregated from the issuer’s proprietary assets.
• In the event of the issuer’s insolvency, the reserve assets shall not form part of the insolvency estate. Stablecoin holders shall have a preferential right of satisfaction from such assets, and no other person may assert claims against or exercise any other rights over them.
• Stablecoin issuers are required to establish internal control and audit mechanisms governing the issuance and redemption of stablecoins. Such issuers shall also set forth an information and communication security management framework and business continuity policies.
• A stablecoin issuer shall maintain confidentiality in respect of transaction data relating to the issuance and redemption of stablecoins and other related data, except where disclosure is required under applicable laws or consistent with FSC regulations.
• Stablecoin issuers are required to disclose the following information to the public:
- - The prospectus or offering memorandum for the proposed stablecoins;
- - Policies governing the management of reserve assets and procedures for stablecoin redemption;
- - The total balance of stablecoins in circulation;
- - The composition, value, and periodic audit results of reserve assets; and
- - Other information as designated by the FSC.
• A stablecoin issuer is required to report relevant stablecoin information and documentation to the FSC and the Central Bank in accordance with applicable rules.
The baseline framework of the Draft Act was previously detailed in our June 2025 Newsletter
For a comprehensive overview of the initial framework, please refer to the
full article
.
The Draft Act will now be presented to the Congress for review and approval before it can be effective. There is no defined timeframe for this process, though it is commonly expected by the local financial business sectors that the Draft Act could become effective as early as the third quarter of this year.
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