Taiwan implements new regulatory framework for virtual assets

Taiwan is implementing a comprehensive regulatory framework for the virtual asset industry following the passage of the Virtual Asset Service Act. The new legislation shifts oversight from basic anti-money laundering measures to a full financial supervisory model, covering exchanges, custody, lending, and underwriting. Existing service providers must apply for licenses within 12 to 21 months, facing higher standards for capital, internal controls, and information security.

The regulatory shift is expected to reshape the market, potentially allowing traditional banks and securities firms to enter the space through services like asset custody, settlement, and Real World Asset (RWA) tokenization. Additionally, the framework will establish oversight for stablecoins, requiring Central Bank approval and asset reserves held in trust.

In conjunction with these developments, the Financial Supervisory Commission has proposed updates to the ‘Travel Rule’ to align with international FATF standards. Under the proposed rules, virtual asset transfers exceeding NT$30,000 will require detailed identity information, including names, wallet addresses, and for individuals, dates of birth and residential addresses. Service providers must be able to verify this information and may be required to reject or suspend transfers if data cannot be obtained.