Are there as many as five versions of the Virtual Asset Service Bill draft? Financial Supervisory Commission report: Stablecoin reserves and interest are the key points

The Chairman of the Financial Supervisory Commission, Peng Jinlong, attended a report at the Legislative Yuan and emphasized that virtual asset regulation will shift from a registration system to a licensing system. The draft special law includes a dedicated chapter on stablecoins, requiring full reserves and prohibiting interest payments.

The FSC promotes a transition to a licensing system and establishes a comprehensive regulatory framework for VASPs

The Financial Supervisory Commission (hereinafter referred to as FSC) Chairman Peng Jinlong visited the Legislative Yuan Finance Committee today (5/7) to deliver a special report on “Development and Outlook of Financial Technology Business.” The report pointed out that, as emerging technologies evolve rapidly, FinTech has become a key factor in strengthening industry competitiveness. The FSC’s current policy focus is on implementing financial and business supervision of Virtual Asset Service Providers (VASPs).

According to the draft Virtual Asset Service Law approved by the Executive Yuan in April 2025 and sent to the Legislative Yuan, Taiwan’s virtual asset regulation is entering a milestone transformation, officially shifting from the previous “Anti-Money Laundering Registration System” to a more stringent “Licensing System.”

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This system transition includes clear transitional regulations. Businesses that have completed AML registration before the new law’s enforcement must apply for a license within nine months after the law takes effect, and obtain the license within 18 months. If the deadline is missed, they will not be allowed to continue operating related businesses. (The draft version proposed by the People’s Party and Lin Siming suggests obtaining a license within 15 months.)

The FSC emphasizes that this adjustment is essentially to establish a regular communication mechanism between the financial industry and VASP operators, ensuring that virtual assets can develop innovatively while managing risks and protecting consumer rights.

Peng Jinlong stated that the FSC is actively creating a friendly development environment and will further enhance Taiwan’s financial market innovation through public-private collaboration.

Legislative race under bipartisan consensus, analysis of four major draft versions

Currently, besides the Executive Yuan version, there are four other draft bills proposed by different party caucuses and members, demonstrating a high level of bipartisan consensus on establishing industry standards. The Taiwan People’s Party caucus, DPP member Lin Chuyin, KMT members Lin Siming and Ge Rujun have each drafted versions of the “Virtual Asset Service Law.”

Image source: Legislative Yuan Finance Committee Besides the Executive Yuan version, there are four other draft bills proposed by different party caucuses and members

The Taiwan People’s Party version emphasizes that the virtual asset market valuation approached $2.5 trillion in January 2022. Despite major shocks such as the Terra Luna collapse and FTX bankruptcy, the market size remained above $1 trillion. Therefore, establishing a comprehensive regulatory system to protect traders’ rights is urgent.

Versions proposed by Ge Rujun, Lin Chuyin, and others widely reference international legislative trends from the EU (MiCA), Japan, South Korea, and Hong Kong, and regulate the diverse nature of virtual assets. Ge Rujun’s version particularly focuses on the impact of virtual assets on traditional finance and the real economy, including cross-border payments, lending, and supply chain finance applications.

In terms of administrative sanctions, all versions propose strict penalties. Violators of mandatory or prohibited regulations could face fines up to NT$6 million, with the possibility of ordered rectification within a deadline. Failure to comply may result in repeated penalties. This rigorous legal design aims to boost public trust in the virtual asset market and ensure rule of law and financial stability.

Stablecoin regulation chapter as a highlight, strict reserve and interest rules

The draft special law lists “Issuance and Management of Stablecoins” as a separate chapter, reflecting the regulator’s high concern about the risks of such assets. The FSC explicitly states that issuing stablecoins within Taiwan must be licensed. Issuers are required to maintain full reserves and issue and redeem at face value. To prevent stablecoins from being mistaken for traditional bank deposits and to avoid speculation risks, the draft specifies that stablecoin issuers cannot pay interest to holders. Additionally, operators must establish strict internal controls, internal audits, and cybersecurity management systems, and regularly report and disclose relevant financial and business information to ensure transparency.

Regarding reserve requirements for stablecoin issuance, the draft introduces a strong deterrent mechanism. If issuers fail to deposit sufficient reserves, the central bank will impose an annual interest of 5% on the shortfall, calculated at the announced minimum refinancing rate. In serious cases, administrative fines ranging from NT$300k to NT$6 million may be imposed. This regulatory framework, combining financial stability and cybersecurity resilience, aims to ensure the steady development of stablecoins in Taiwan. The FSC also states that after the law is enacted, relevant delegated regulations will be drafted to officially open applications for stablecoin issuance.

Asset tokenization and AI leading the future, continuous financial technology innovation

In addition to building the legal framework, the FSC is also promoting experiments in asset tokenization (RWA), focusing on bonds and gold as initial targets. By using blockchain technology to convert physical assets into digital certificates, it can enhance asset liquidity and reduce transaction and clearing complexity.

Furthermore, the FSC is actively promoting the “Hidden Light Project,” launched in March 2025, which has already visited 15 financial and tech startups to help clarify regulatory challenges in innovation experiments and business pilots, and to identify promising innovative projects. This initiative complements the “Inclusive Finance” proposal competition held in 2025, jointly promoting digital financial innovation.

On the technological application front, the FSC is also focusing on the development of proxy AI and programmable AI. To guide financial institutions in appropriately applying AI, the FSC is promoting the “Programmable AI Governance Project,” researching domestic and international regulations, identifying financial application scenarios, and establishing quantifiable risk assessment indicators.

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The report concludes by mentioning that the “2025 Taipei FinTech Forum” held in October 2024 attracted participation from experts from eight countries and over 30 specialists, with nearly 1,000 in-person attendees. Through international exchanges and technological integration, Taiwan is striving to build a digital financial ecosystem that combines innovation and security resilience in the global FinTech wave.