Taiwan’s Financial Supervisory Commission plans to reveal a draft law in June 2025 allowing local banks to issue stablecoins pegged to the New Taiwan Dollar. This framework aims to bridge traditional finance and cryptocurrencies, enhancing investor access to digital assets. The regulations will require FSC approval for stablecoinA cryptocurrency pegged to the value of a stable asset, such issuance, and strict compliance guidelines will be established. We’ll also see a pilot program for crypto custody services in Q1 2025. This move could position Taiwan as a leader in financial innovation.
As Taiwan prepares to revolutionize its financial landscape, the Financial Supervisory Commission (FSC) is set to reveal a groundbreaking draft law in June 2025 that will allow local banks to issue stablecoins pegged to the New Taiwan Dollar (TWD). This bold move aims to bridge the gap between traditional finance and the burgeoning world of cryptocurrencies, offering investors a safer entry point into the digital asset market. The initiative aligns with the growing acceptance of stablecoins as a bridge between traditional finance and cryptocurrencyA digital or virtual currency that uses cryptography for sec markets.
The proposed legislation is part of an extensive regulatory framework known as the “VASP Registration Regulations,” enacted in January 2025. This framework sets strict guidelines for virtual asset service providers, including adherence to anti-money laundering protocols and submission of annual risk assessment reports. By allowing banks to issue stablecoins, Taiwan is taking a significant step towards creating a more regulated and secure environment for cryptocurrency transactions. The new regulations also include harsh penalties for non-compliance, with fines of up to NT$5 million and potential criminal charges for violations.
We’re excited about the potential impact of this initiative. Under the new framework, all stablecoins issued in Taiwan will require FSC approval, ensuring a high level of oversight and trust. The draft law will stipulate specific requirements for issuers, including qualifications and rules for tokenA digital asset issued on a blockchain, often representing v reserve allocation. This approach addresses concerns about backing popular stablecoins like USDT and USDC, which currently operate without direct regulatory approval.
The stablecoin issuance process will involve users depositing fiat currencyGovernment-issued currency not backed by a physical commodit with the issuing bank, creating an equivalent amount of stablecoins upon receipt of the collateral. This centralized approach, similar to that used by USDC and USDT, will be subject to joint management by the banks and the central bank, providing an additional layer of security and stability.
In addition to stablecoin issuance, the FSC plans to launch a pilot program for crypto custody services in the first quarter of 2025. This initiative will allow interested financial institutions to apply for authorization to offer custody services for Bitcoin and other cryptocurrencies, further integrating digital assets into Taiwan’s traditional banking ecosystem.
We can’t overstate the significance of these developments. By allowing banks to issue TWD-pegged stablecoins, Taiwan is positioning itself at the forefront of financial innovation. This move aligns with global trends, as other jurisdictions like the EU and UK are also exploring frameworks for bank-issued stablecoins.
However, it’s crucial to acknowledge that this newfound freedom comes with responsibilities. The regulatory framework includes strict penalties for non-compliance, with fines of up to NT$5 million and potential criminal charges for violations. These measures underscore Taiwan’s commitment to fostering a transparent and accountable crypto ecosystem.
As we look ahead, we’re optimistic about the potential of this framework to drive innovation and growth in Taiwan’s financial sector. By providing a clear regulatory path for bank-issued stablecoins, Taiwan creates new opportunities for financial institutions and investors.
We’re enthusiastic about seeing how this initiative will shape the future of finance in Taiwan and potentially serve as a model for other countries in the region.
