Taiwan Mandates 100% Stablecoin Reserves, Up to 10 Years for Fraud

Unauthorized crypto platforms in Taiwan now face up to seven years in prison and fines of NT$100 million ($3.14 million). That's the sharp end of the Virtual Asset Service Act, approved Tuesday by the Legislative Yuan in its third reading and headed to President Lai Ching-te for signature within ten days.

Until now, crypto businesses only needed to register for anti-money laundering compliance — a checkbox exercise. The new law shoves the whole sector into full-scale financial regulation. Every virtual asset service provider — exchanges, custodians, brokers — must secure an explicit license from the Financial Supervisory Commission (FSC) before operating. Already-registered firms get a 12-month grace period to apply, with up to 21 months total to obtain full FSC approval and any other required permits.

Stablecoin Operators Face Double Approval and 100% Reserves

Stablecoin issuers drew the toughest requirements. They need approval from both the central bank and the FSC, and must maintain 100% asset reserves at all times. No fractional backing, no algorithmic experiments — full fiat collateral, auditable on demand. The Bank for International Settlements recently warned about foreign-exchange risk from dollar-pegged stablecoins; Taiwan's regulators clearly took that memo to heart.

Penalties That Will Make Executives Sweat

The law doesn't mess around. Unauthorized operation of crypto platforms or stablecoin services: up to 7 years in prison and fines up to NT$100 million. Market fraud or price manipulation carries 3 to 10 years behind bars and fines ranging from NT$10 million to NT$200 million (about $6.3 million at the high end). That's a serious deterrent for anyone thinking they can run a pump-and-dump scheme out of Taipei.

The Executive Yuan will set the official start date once the President signs. The real test will be whether the FSC can process license applications fast enough before the 12-month grace period runs out.

Source: Taiwan's sweeping crypto law raises the bar with licensing, reserve mandates, and tough penalties
Domain: coindesk.com