Taiwan has passed a new law covering the full range of cryptocurrency service businesses and introduced a licensing system for stablecoin issuance.

Coinpost, a blockchain media outlet, reported on Tuesday local time that Taiwan's legislature passed the Virtual Asset Service Act on June 30 to comprehensively regulate cryptocurrency-related service providers.

The core of the law is that it legally defines crypto businesses by type and expands supervisory scope from anti-money laundering-focused rules to a framework that manages overall business operations and market order. The Financial Supervisory Commission, Taiwan's financial regulator, said the legislation would elevate oversight of crypto businesses from "anti-money laundering measures" to "overall soundness of business operations and market order."

The new law divides virtual asset service providers (VASPs) into 7 types: exchange, trading platform, transfer, custody, underwriting, lending and others. It requires each operator to ensure the appropriateness of finances and operations, assess the qualifications of management and working-level personnel, build internal control and audit systems, and establish cybersecurity management frameworks.

It also detailed standards for operating exchanges. The law requires systems to review crypto listings and delistings and includes rules on segregated custody of client assets, management of outsourced tasks, civil liability for damages to customers, and the obligation to submit financial reports. Oversight of existing crypto exchanges is expected to rise sharply as a result.

Stablecoin regulation has been tightened separately. To issue stablecoins in Taiwan, an issuer must obtain both the central bank's consent and approval from the Financial Supervisory Commission. Issuers must hold 100 percent of reserve assets and manage them separately under a trust arrangement. Regular audits and disclosure obligations are also imposed.

Penalties for unfair market practices have also been strengthened. The law explicitly bans price manipulation and false and fraudulent acts. Violations can be punished by 3 to 10 years in prison, and a fine ranging from 10 million to 200 million New Taiwan dollars can also be imposed.

Existing operators will be given a grace period. The effective date will be set later by the Executive Yuan, but VASPs that complete anti-money laundering registration before the law takes effect and financial institutions that have already provided services under Financial Supervisory Commission rules must apply for approval within 12 months after it takes effect. The deadline to obtain final approval or a licence is within 21 months. A one-time extension of 3 months is possible if there are unavoidable circumstances.

Follow-up institutional work is also expected. The Financial Supervisory Commission said it would move to draft subordinate regulations and continue consultations with stakeholders such as industry groups by reflecting supplementary resolutions of the legislature's finance committee and lawmakers' opinions.

The legislation shows Taiwan is shifting its crypto industry from a simple reporting and registration stage to a licensing and ongoing supervision system. In particular, by requiring both central bank consent and financial regulator approval for stablecoins, it appears that issuer eligibility, reserve asset management and compliance with disclosures will become key standards in Taiwan's market.