Taiwan Passes Crypto Law Requiring Licenses and Tougher Penalties for Violations

• Taiwan approves crypto licensing law with stricter compliance requirements nationwide.
• Existing firms receive transition periods before mandatory licensing compliance deadlines.
• Banks may enter market increasing competition alongside stronger enforcement measures.

Taiwan has approved a new cryptocurrency law that requires digital asset companies to obtain regulatory licenses while introducing stricter rules for stablecoin issuers and tougher penalties for violations.

New law establishes licensing framework for crypto firms

Taiwan’s Legislative Yuan passed the Virtual Asset Service Act in its third reading on Tuesday. The bill now heads to President Lai Ching-te, who is expected to promulgate it within 10 days. The cabinet will later determine when the law officially takes effect. Under the legislation, every virtual asset service provider must obtain approval from the Financial Supervisory Commission before operating in Taiwan. Besides creating a licensing system, the law strengthens cybersecurity requirements, customer asset protection measures, and internal governance standards.

Also Read: Bitcoin Falls Below Historic 200-Week Average as $320M Longs Get Wiped Out

Existing crypto businesses that already completed anti-money laundering registration will receive a transition period. They will have 12 months to apply for licenses after the law takes effect and another 21 months to secure full regulatory approval and other required permits. The legislation also introduces tighter oversight for stablecoins. Companies seeking to issue or manage stablecoins must obtain approval from both the central bank and the Financial Supervisory Commission. Additionally, every stablecoin must remain fully backed by reserves.

Authorities also introduced tougher criminal penalties. Anyone operating an unlicensed virtual asset business or stablecoin service could face up to seven years in prison and fines reaching NT$100 million. Fraud and crypto market manipulation may result in prison terms ranging from three to 10 years alongside higher financial penalties.

Industry braces for legal clarity and stronger competition

The new legislation is expected to reshape Taiwan‘s digital asset industry by replacing regulatory uncertainty with clearer operating standards. Kevin Cheng, a Taiwanese lawyer and founder of Harmony Governance Advisors, said businesses that previously operated in legal gray areas will no longer rely on regulatory ambiguity. He also explained that traditional financial institutions will eventually gain access to the market, creating stronger competition for existing crypto companies.

Meanwhile, Titan Cheng, chairman of the Taiwan VASP Association and founder of BitoGroup, said the association will work with regulators to develop detailed implementation rules covering licensing, operations, personnel management, and internal controls. Additionally, the group will help crypto firms navigate the transition period and reduce disruption as Taiwan begins enforcing its new regulatory framework.

Taiwan’s new law provides clearer rules for crypto businesses while introducing stricter oversight, licensing requirements, and stronger enforcement. As implementation begins, companies will need to strengthen compliance and prepare for a more competitive digital asset market.

Also Read: Ripple President Outlines Next Phase for XRP in Institutional Payments Push

The post Taiwan Passes Crypto Law Requiring Licenses and Tougher Penalties for Violations appeared first on 36Crypto.