Taiwan FSC Publishes Draft Virtual Asset Services Act Modeled on MiCA

Taiwan's crypto industry has operated in a regulatory gray zone for years, governed mainly by AML rules and industry self-regulation. The FSC's draft Virtual Asset Services Act, published March 25, 2025, attempts to change that by importing large chunks of the EU's MiCA framework into Taiwanese law. Whether the legislature will actually pass it is another question entirely.

From AML patch to dedicated legislation

The regulatory foundation shifted in July 2024 when Taiwan's legislature amended the Anti-Money Laundering Act to require all VASPs to complete AML registration with the Financial Supervisory Commission. That amendment brought exchanges, custodians, and wallet providers under formal AML/CFT oversight for the first time.

But AML registration is not the same as a licensing regime. It tells firms what they cannot do (facilitate money laundering) without telling them what they must do to operate safely (capital requirements, custody standards, consumer protection). The draft Virtual Asset Services Act fills that gap. Published on March 25, 2025, it went through public consultation until May 24, 2025, and was submitted to the Executive Yuan in June 2025.

The Act borrows heavily from the EU's Markets in Crypto-Assets Regulation. Stablecoin issuance is reserved for licensed financial institutions, with full reserve backing, asset segregation, and domestic custody requirements. All VASPs must obtain FSC approval before operating. Unregistered operators face criminal penalties: up to two years imprisonment or fines of NT$5 million (roughly $155,000).

The self-regulatory layer

In parallel, the industry built its own governance structure. The Taiwan Virtual Asset Service Provider Association (TVASPA) launched on June 13, 2024, with 24 founding members. Titan Cheng, CEO of BitoPro, chairs the association. Winston Hsiao, co-founder of XREX, serves as vice-chair.

Under the draft Act, VASPs must hold both FSC approval and TVASPA membership before they can legally operate. This dual-gate system gives the regulator a formal enforcement channel while delegating day-to-day compliance standards to the industry body. The model resembles how securities self-regulatory organizations function in other markets.

There is an awkward footnote here. In May 2025, BitoPro suffered a hack that cost approximately $11.5 million. The chair of the industry's self-regulatory body presides over a company that experienced one of Taiwan's largest crypto security breaches. That does not disqualify TVASPA from functioning, but it does raise uncomfortable questions about whether the SRO model can credibly enforce the cybersecurity standards the Act envisions.

Stablecoins and banking pilots

The stablecoin provisions deserve attention. Only licensed financial institutions can issue stablecoins under the draft Act, with full reserve backing and mandatory domestic custody. Three private banks have expressed interest in a crypto custody pilot, and the FSC has set a target of launching the first regulated stablecoin in the second half of 2026.

MaiCoin, one of Taiwan's oldest crypto platforms, is reportedly planning an IPO on the Taiwan Stock Exchange, which would make it the island's first publicly listed crypto firm. If the Act passes, publicly traded exchanges would face dual scrutiny from both securities regulators and the new VASP framework.

Will it actually pass?

The draft was submitted to the Executive Yuan in June 2025. From there it must go to the Legislative Yuan for debate and voting. Taiwan's legislature has a packed agenda, and crypto legislation does not rank as a political priority for most lawmakers. The bill could sit in committee for months. It could be amended beyond recognition. Or it could pass quickly if a major fraud case creates political pressure.

The criminal penalty provisions (imprisonment for unlicensed operation) suggest the FSC wants deterrent power. But deterrence only works if the law is enacted. Until the Legislative Yuan votes, Taiwan's VASPs operate under AML registration and TVASPA self-governance, a framework that is functional but lacks the teeth the FSC is pushing for.