Taiwan to Allow Banks to Issue Stablecoins Pegged to NTD

Highlights:

• Taiwan will allow banks to issue stablecoins pegged to the New Taiwan dollar under a draft law in June 2025.
• New AML rules require VASPs in Taiwan to register and comply or face fines and imprisonment for non-compliance.
• Taiwan aims to boost financial growth with stablecoin regulations and stricter rules for virtual asset providers.

The Financial Supervisory Commission of Taiwan is expected to introduce a draft law on virtual asset service providers in June 2025. For the first time, Taiwan banks will be allowed to issue stablecoins under the draft law. Instead of the US dollar, these stablecoins will be pegged to the New Taiwan dollar. All locally issued stablecoins will be jointly managed by the central bank with the FSC, the body has confirmed.

🇹🇼TAIWAN TO PROPOSE VIRTUAL ASSET LAW BY JUNE 2025, ALLOWING BANKS TO ISSUE STABLECOINS

Taiwan plans to introduce a virtual asset law by June 2025, which will allow banks to issue stablecoins, bridging traditional and digital finance.

This move aims to regulate and integrate… pic.twitter.com/SnG82h8MDc

— Mario Nawfal (@MarioNawfal) January 23, 2025

Peng Jinlong, the Chairman, pointed out that stablecoins will act as a bridge between fiat currencies and cryptocurrencies. In addition, stablecoins will create a more accessible trading portal for cryptocurrency investors. Peng insisted that any stablecoin issuance in Taiwan would require approval. Meanwhile, the draft law will detail criteria for issuers as well as other requirements.

Central Bank Director Zhuang Xiuyuan slammed existing stablecoins like USDT and USDC. Their legitimacy, he stated, is based on claims by the issuing firms, not government approval. However, stablecoins will only move from the virtual economy to the real economy when the policy issues are resolved.

Stricter Rules for Virtual Asset Service Providers Under New AML Regulations

All VASPs must complete compliance registration as part of the regulations. Failure to comply could result in criminal penalties, including imprisonment and fines of up to NT$5 million.

The new regulations will increase entry barriers and operational requirements for VASPs. The rules aim to bring the crypto business in line with the standards established by other traditional financial institutions. Internal controls and information security systems must be adequate for VASPs. This will protect the confidentiality, accuracy, and availability of the data.

VASPs must establish fair procedures for resolving customer disputes. They also must retain business records for at least five years after the end of a relationship with a customer. These measures will provide clarity and allow for regulatory review on a case-by-case basis.

Under these regulations, the FSC said it will take stricter enforcement on non-compliant VASPs. Secretary General of the Taiwan Fintech Association, Kevin Cheng, highlighted the importance of compliance. According to him, the regulations will help attract institutional investors into the crypto industry. In related news, Taiwan will begin the trial of cryptocurrency custody services through local banks in 2025.

Focus on Financial Growth and Innovation in Taiwan

The financial sector of Taiwan reported record pre-tax earnings of NT$1.22 trillion for the first 11 months of 2024. The FSC outlined several achievements in its 2024 report. These include promoting regulatory easing for high-asset private banking and supporting loans to small and medium-sized businesses. Besides facilitating bond and securities trading, the agency also brought in rules for artificial intelligence in finance.

Other virtual asset rules will be rolled out at the same time as FSC regulations for stablecoins. After the public hearings in February 2025, the agency will submit the draft law to the legislature in June. Once passed, the law will require stablecoin approval and further protections for consumer assets.