The virtual asset industry in Taiwan is stepping into a new era. On June 13, the Chinese Republic Virtual Currency Business Association (referred to as the "Virtual Currency Association") officially convened its First Ordinary General Meeting and First Joint Council Meeting of Directors and Supervisors, marking a historic milestone. This event signifies the formal recognition of Taiwan’s virtual asset sector as a legitimate, government-acknowledged industry—transitioning from years of regulatory ambiguity into a structured, progressive framework.
As the first blockchain-related industry in Taiwan to establish an official trade association under government supervision, this development reflects a significant shift. The Financial Supervisory Commission (FSC), specifically its Securities and Futures Bureau (SFB), now serves as the designated regulatory authority. This journey hasn’t been easy. For years, virtual assets lacked clear legal classification—whether as currency, financial products, or commodities—and were often labeled merely as "virtual goods" rather than recognized assets.
Negative media coverage further stigmatized the sector, creating headwinds for innovation. Yet, amidst these challenges, a growing number of dedicated industry players have worked tirelessly to promote responsible growth and positive societal impact.
Now, under FSC mandates, only platforms that have completed the Anti-Money Laundering (AML) Compliance Statement are permitted to form and operate within the association. The official launch of this self-regulatory body marks the beginning of a new phase: industrialization through structured oversight.
According to FSC Chairperson Peng Jin-long’s report to the Legislative Yuan’s Finance Committee on June 12, the regulation of Virtual Asset Service Providers (VASPs) follows a four-stage incremental approach:
- Stage 1: Enactment of the VASP Anti-Money Laundering and Counter-Terrorist Financing Measures to bring VASPs under initial regulatory oversight.
- Stage 2: Establishment of a VASP industry association with self-regulatory guidelines.
- Stage 3: Amendments to the Anti-Money Laundering Act introducing mandatory registration, clear VASP definitions, criminal penalties for non-compliance, and differentiated regulatory frameworks.
- Stage 4: Enactment of a dedicated virtual asset management law to comprehensively govern market behavior while fostering fintech and VASP industry development.
Stage One: Anti-Money Laundering Foundations
The catalyst for regulation came in 2017 during the global ICO (Initial Coin Offering) boom, which sparked widespread public interest in cryptocurrencies. With no existing regulatory framework, Taiwan chose to begin with anti-money laundering (AML) as the foundational step.
Debates arose over whether to adopt a “declaration system” or a stricter “licensing system.”蔡玉玲 (Tsai Yu-ling), Honorary Chair of the Taiwan FinTech Association and Advisor to the VASP Association Preparatory Committee, recalled in a Web3 Great Westward Expansion podcast episode that some advocated for a licensing model requiring government approval before operation. However, given the nascent state of the industry at the time, such strict controls were deemed premature.
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Instead, authorities opted for a pragmatic path: designating the FSC as the lead agency for AML compliance without imposing full licensing requirements. This allowed room for industry growth while establishing basic safeguards.
On November 7, 2018, Taiwan amended its Anti-Money Laundering Act to include "virtual currency platforms and transaction service providers" under its scope. The Executive Yuan formally assigned the FSC as the supervisory authority. Then, on June 30, 2021, the FSC released the official VASP Anti-Money Laundering and Counter-Terrorist Financing Measures.
Since then, all platforms serving Taiwanese users must complete the AML compliance declaration to operate legally. As of June 2024, 25 platforms have been officially recognized on the FSC’s published list. These entities are subject to financial inspections; all others are considered non-compliant.
While this stage laid critical groundwork, it focused narrowly on AML risks—leaving consumer protection and broader market integrity issues unaddressed.
Stage Two: Building Self-Regulation Through Industry Governance
A major turning point came on March 30, 2023, when the Executive Yuan officially designated the FSC as the regulator for virtual asset platforms with financial or payment functions. Crucially, virtual currencies were not classified as licensed financial institutions like banks or e-payment services—preserving space for innovation while enabling oversight.
To guide this transition, the FSC issued the Guidelines for Supervision of Virtual Asset Service Providers (VASPs) in September 2023. These guidelines set the stage for industry self-governance and paved the way for formal association formation.
On November 27, 2023, Taiwan’s Ministry of Economic Affairs and Ministry of the Interior officially added “virtual currency commerce” as a recognized business category—elevating crypto to the status of a new legal industry.
Following these developments, nine leading VASP operators—including XREX—formed the Taiwan VASP Association Preparatory Group on September 8, 2023. Winston Hsiao (蕭滙宗), Co-Founder and Group Revenue Officer of XREX, served as convener.
Over nearly ten months, the group held weekly meetings—18 in total—along with a founding session. All discussions were recorded and made publicly available via twvasp-po.org.tw, ensuring transparency throughout the process.
In December 2023, Tsai Yu-ling submitted the formal application to the Ministry of the Interior. Approval came on February 26, 2024, authorizing the establishment of the association.
This is no ordinary trade group. As a regulatory-grade association formed under FSC guidelines, it acts as the sole official liaison between government and industry. Its first major task? Drafting comprehensive self-regulatory standards to ensure fair practices, security, and user protection across the ecosystem.
Winston Hsiao emphasized that self-regulation isn’t about avoiding oversight—it’s about building the technical and institutional infrastructure necessary for effective external regulation:
“Self-regulation isn’t about letting the industry police itself. It’s about creating foundational systems that enable effective external supervision.”
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With both a clear regulator and an organized industry body now in place, Taiwan’s crypto sector is entering a mature phase where innovation aligns with accountability.
Frequently Asked Questions
Q: What is the purpose of forming a virtual asset association in Taiwan?
A: The association serves as a self-regulatory body that collaborates with regulators to establish industry standards, enhance transparency, protect consumers, and promote sustainable growth within a compliant framework.
Q: Is cryptocurrency legal in Taiwan?
A: Yes. While not considered legal tender, virtual assets are recognized as a legitimate business category. Platforms must comply with AML regulations and may face future licensing requirements under evolving laws.
Q: How many crypto exchanges are legally operating in Taiwan?
A: As of June 2024, 25 platforms have completed the FSC’s AML compliance declaration process and are recognized as compliant operators.
Q: What does “Stage Two” regulation mean for users?
A: Users gain greater confidence through increased platform accountability, standardized practices, and clearer dispute resolution mechanisms—all aimed at improving safety and trust.
Q: Will there be a licensing requirement for crypto platforms in Taiwan?
A: While not yet mandatory, Stage Three involves introducing a registration system with potential criminal liability for violations. A full licensing regime may follow under Stage Four legislation.
Q: How does Taiwan’s approach compare to other countries?
A: Taiwan adopts a gradual, risk-based model similar to Japan and Singapore—prioritizing AML first, then building institutional frameworks before enacting comprehensive laws.
Taiwan’s journey reflects a balanced strategy: allowing innovation to flourish while systematically addressing risks. From AML foundations in 2018 to today’s self-regulatory association, each step has built upon the last.
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With Stage Two now realized, attention turns to upcoming legislative reforms and enhanced consumer protections—ushering in a future where technology, trust, and regulation coexist.