Crypto Regulation in Taiwan: VASP Registration and the Path to Licensing

From “Hands-Off” to Strict Supervision

Taiwan has long been a technological hub for the blockchain industry, hosting major hardware wallet manufacturers like CoolWallet and prominent DeFi teams. However, the regulatory landscape has evolved significantly from its early “hands-off” days. As of 2025, Taiwan has transitioned into a strictly regulated market where compliance is mandatory.

The days of unregulated operation are over. Under amendments to the Money Laundering Control Act (MLCA), all Virtual Asset Service Providers (VASPs) operating in Taiwan must register with the Financial Supervisory Commission (FSC) or face criminal liability.

The Current Regime: VASP Registration

The core pillar of Taiwan’s current crypto regulation is the VASP Registration System. This system requires any business providing exchange, custody, or transfer services to complete a compliance declaration with the FSC.

Key requirements for registration include:

• Segregation of Assets: Customer assets must be held separately from the platform’s corporate funds.
• Cold Storage Ratios: A significant portion of client assets must be held in offline “cold” wallets to minimize hacking risks.
• Information Security: Platforms must obtain ISO 27001 certification or equivalent security audits.
• Travel Rule Compliance: Transfers between exchanges must include sender and beneficiary information to combat money laundering.

Failure to register is no longer just a regulatory breach; it is a criminal offense. Recent legal amendments have introduced potential prison sentences for operators who solicit business from Taiwanese citizens without proper registration.

The 2019 STO Framework (A Historical Context)

The original excitement around Taiwan’s regulations centered on the Security Token Offering (STO) framework released in 2019. While groundbreaking at the time, this framework has seen limited adoption due to its restrictive nature.

Under the STO rules managed by the Taipei Exchange (TPEx):

• Fundraising Cap: Projects can only raise up to NTD 30 million (approx. $1 million USD). Raises above this amount must enter a “Regulatory Sandbox,” a costly and lengthy process.
• Investor Restrictions: Only “Professional Investors” (high-net-worth individuals and institutions) can participate.
• Trading Limitations: Secondary trading is heavily restricted to the platform that issued the token, fragmenting liquidity.

Because of these low caps and high costs, most Taiwanese projects opted to issue utility tokens or register offshore, leaving the STO framework largely dormant.

The Future: A Dedicated “Special Law”

Looking ahead to 2026, the FSC is drafting a dedicated Virtual Asset Management Act (Special Law). This legislation is expected to move Taiwan from a “registration” system to a full “licensing” regime, similar to the Markets in Crypto-Assets (MiCA) regulation in Europe.

This future law is expected to introduce:

• Capital Requirements: Higher minimum capital reserves for exchanges.
• Consumer Protection: Mandatory insurance funds to cover potential hacks or insolvency.
• Derivatives: Potential frameworks for crypto derivatives and ETFs, which remain restricted under the current regime.

Summary for Investors

Taiwan remains a crypto-friendly jurisdiction, but it is no longer the “Wild West.” For investors, this provides greater safety, as local exchanges like Maicoin and BitoGroup operate under strict oversight. For international projects, the message is clear: You cannot market to Taiwanese users without a local entity and FSC registration.