TAIPEI (TVBS News) — Taiwan's parliament took a decisive step toward cryptocurrency regulation Thursday (June 12), hosting a crucial public hearing on the draft Virtual Asset Service Providers Act (虛擬資產服務法) that could reshape the island's digital finance landscape. The Legislative Yuan (立法院), Taiwan's legislature, convened industry stakeholders and regulators at its Finance Committee (財政委員會) to deliberate the groundbreaking legislation. Financial Supervisory Commission Vice Chairperson Chen Yen-liang (陳彥良) offered reassurance to concerned businesses, pledging that the commission would carefully evaluate extending transitional provisions to ensure companies receive adequate preparation time for compliance.
The commission's comprehensive report detailed a systematic four-phase management framework designed to oversee virtual asset and transaction businesses (VASP) across Taiwan's evolving digital finance sector. The proposed legislation places particular emphasis on stablecoin regulation, clearly defining these digital currencies as virtual assets directly pegged to legal tender values. Taiwan's Central Bank (中央銀行) contributed critical analysis highlighting that stablecoins linked to single fiat currencies maintain strict 1:1 exchange ratios, requiring robust backing by high-quality, liquid financial assets to ensure market stability and consumer protection.
The Central Bank issued stern warnings regarding stablecoins linked to multiple fiat currencies or diverse asset classes, cautioning that such complex structures could significantly complicate regulatory oversight while amplifying systemic risks. Bank officials recommended implementing tiered management levels to effectively navigate these intricate regulatory challenges. The Taiwan Virtual Asset Anti-money laundering Association (台灣虛擬資產反洗錢協會) expressed strong support for creating dedicated legislation to accelerate the virtual asset industry's development. The association advocated for more flexible sub-regulatory frameworks and urged businesses to establish robust connections with global liquidity pools to prevent market depth limitations that could hinder growth.
Chen emphasized stablecoins' pivotal role as the predominant mechanism facilitating international virtual asset payment transactions across global financial networks. The proposed legislative framework incorporates strategic flexibility for future regulatory expansion through subsidiary laws that can adapt dynamically to evolving market demands and technological innovations. The draft act includes an innovative regulatory sandbox environment designed to foster controlled experimentation and technological advancement, enabling the virtual asset sector to develop responsibly while maintaining appropriate oversight and robust consumer protection measures throughout the implementation process. ◼