The Executive Yuan yesterday approved a draft of the virtual asset service act (虛擬資產服務法), introducing strict penalties for unlicensed or fraudulent activities in the crypto sector.
Those issuing stablecoins without a license could face up to seven years in prison and fines of up to NT$100 million (US$3.13 million), according to the draft.
Offenses involving falsification, concealment or price manipulation carry harsher penalties of three to 10 years in prison and fines of up to NT$200 million, it added.
Photo: Reuters
Premier Cho Jung-tai (卓榮泰) said the law would be rolled out in four gradual phases and aims to support the growth of domestic financial innovation.
Cho said that in the past few years, financial technology has advanced rapidly, particularly with the growing use of virtual assets, which are reshaping traditional financial transactions.
In response, the Financial Supervisory Commission (FSC) has aligned with international regulatory trends and, using anti-money laundering standards as a foundation, brought virtual asset service providers (VASP) under supervision, he said.
The new framework includes industry self-regulation, a registration system for anti-money laundering compliance and the introduction of a dedicated virtual asset service act which would be implemented in four gradual phases, he said.
The measures also aim to bolster the security of virtual asset transactions, pilot custody services and support the growth of domestic financial innovation, he added.
Under the draft, the types and establishment of VASP must be approved.
VASPs must operate exclusively in this field, and their company name, organizational structure and capital must meet specific standards, it says, adding that financial institutions can operate VASP services alongside their other businesses with approval.
Management requirements for VASPs include establishing internal controls and audit systems, segregating customer assets, and maintaining data confidentiality, it says.
In addition, special regulations would be tailored to the nature of each service provider — for example, trading platforms must set clear standards for listing and delisting virtual assets, it adds.
As for stablecoin issuance, it is not currently limited to banks, FSC Deputy Chairman Chen Yen-liang (陳彥良) said.
As international experience shows that most issuers are financial institutions or financial firms, the regulatory approach would adopt a “gradual opening” model, Chen said.
Banks, given their capital strength and risk management capabilities, are generally better positioned to meet the relevant requirements, he said.
For other operators, different capital thresholds and operating guarantee requirements would be set based on the nature of their business, he said, adding that further details would be announced after the legislation is passed.
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