The fintech landscape in Taiwan has been evolving rapidly, with recent regulatory attention increasingly focused on digital payments and virtual assets. As innovation accelerates, the Financial Supervisory Commission (FSC) is balancing consumer protection, financial stability, and technological advancement through targeted legal frameworks. This article explores the latest legal developments shaping Taiwan’s fintech ecosystem.
Payment Services Regulation
Traditional payment methods in Taiwan—such as bank transfers and credit card transactions—are now being complemented by a growing digital payment infrastructure. The Electronic Payment Institutions Act, first implemented in 2015 and revised in 2021, serves as the cornerstone of this transformation.
Under the updated law, electronic payment institutions are permitted to operate in three core areas:
- Acting as agents to collect and disburse funds for genuine transactions
- Accepting stored-value funds
- Providing small-value domestic and cross-border remittance services
Additionally, these institutions may offer foreign exchange services tied to their core operations. Notably, non-electronic payment entities can also apply to provide cross-border remittance services—particularly for foreign workers in Taiwan—under specific conditions.
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A key threshold exists for operators handling transaction funds: if the total balance of entrusted funds remains below NT$2 billion (approximately USD 61.6 million), set by the FSC, they are classified as third-party payment service providers and do not require full FSC licensing.
However, all such providers must comply with anti-money laundering (AML) requirements under Taiwan’s revised AML law. Before launching services, they must register with the Ministry of Digital Affairs for both AML compliance and operational capability. Foreign third-party providers must establish a local entity or branch under the Company Act and complete the same registration process. Non-compliance may result in criminal liability.
Virtual Assets and Cryptocurrency Framework
Taiwan distinguishes between two main categories of digital assets:
- Security tokens (those exhibiting characteristics of securities)
- Non-security tokens (cryptocurrencies without such features)
Security Token Offerings (STOs)
Security tokens are defined by the FSC as digital assets using cryptography or distributed ledger technology that meet all four criteria:
- Investment of money
- In a common enterprise
- With an expectation of profit
- Derived primarily from the efforts of others
These offerings fall under Security Token Offerings (STOs). In 2020, the GreTai Securities Market (GTSM), authorized by the FSC, introduced a regulatory framework allowing STOs up to NT$30 million per issuance.
Key requirements include:
- Issuers must be Taiwan-incorporated joint-stock companies
- Excludes listed companies on major exchanges
- Only profit-sharing or debt-type tokens permitted
- Participation limited to professional investors
- Individual investment cap of NT$300,000 per STO
Platforms facilitating STOs must hold a securities dealer license, ensuring professional oversight and investor protection.
Non-Security Tokens and VASPs
For non-security virtual assets, Taiwan has integrated Virtual Asset Service Providers (VASPs) into its AML regime. VASPs cover services including:
- Converting virtual currencies to fiat and vice versa
- Exchanging one virtual currency for another
- Transferring virtual assets
- Custody and management of digital wallets
- Participation in initial coin offerings (ICOs)
In 2021, the FSC issued the Anti-Money Laundering Guidelines for Virtual Currency Platforms and Trading Businesses, mandating:
- Robust internal control systems
- Suspicious transaction reporting
- Know Your Customer (KYC) protocols
All VASPs must submit a compliance statement to the FSC confirming adherence to AML laws. They are required to complete FSC registration before offering services. Foreign VASPs must establish a local presence under the Company Act and follow the same process.
Following the FTX collapse in 2023, the FSC released additional guidance extending beyond AML, including:
- Mandatory publication of project whitepapers by issuers
- Clear rules on asset custody and segregation between platform and user funds
In mid-2024, several local VASPs formed an industry working group that officially launched a self-regulatory association. The organization is currently developing internal governance standards to promote transparency and trust.
Peer-to-Peer (P2P) Lending Landscape
Taiwan currently lacks dedicated legislation for P2P lending. However, the Bankers Association of Taiwan has established voluntary guidelines defining permissible collaboration between banks and P2P platforms. These include:
- Fund escrow services
- Cash flow management
- Credit assessment and rating
- Bank-to-business (P2B) lending models
- Marketing support
- Document custody
While the FSC has clarified that P2P platforms are not currently under its direct supervision, it issued guidelines in October 2023 to mitigate risks. These prohibit platforms from engaging in regulated activities like deposit-taking or securities issuance.
Required risk controls include:
- Real-name verification for borrowers and lenders
- Controlled fund flows
- Loan review criteria and exposure limits
- Consumer protection clauses
These measures aim to foster responsible innovation while safeguarding participants.
Digital Banks and Insurance
In 2018, Taiwan introduced regulations for fully digital banks—institutions without physical branches. The FSC approved all three initial applicants in 2019, and these banks are now operational.
For digital insurance, the FSC announced a policy framework in December 2021 to encourage innovation. Despite setting clear entry requirements, only two applications were submitted by the 2022 deadline—and neither was approved. Reports suggest the FSC plans to reopen applications by the end of 2024, signaling renewed interest in digital insurance expansion.
Regulatory Sandbox for Innovation
To support fintech experimentation, Taiwan enacted the FinTech Innovation and Experimentation Act in 2018—commonly known as the regulatory sandbox.
Under this framework:
- Companies must obtain FSC approval before testing
- Certain regulatory obligations (e.g., licensing) may be temporarily relaxed
- Post-experiment review determines whether legal adjustments are needed
Successful experiments may lead to permanent regulatory changes. However, participants typically still require formal licensing to scale their services commercially.
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Future Outlook: What’s Next for Fintech Law?
FSC Chairperson Dr. Eddie Peng has outlined several strategic priorities:
- Drafting a dedicated cryptocurrency law, expected by mid-2025
- Allowing financial institutions to provide virtual asset custody services
- Establishing an RWA (Real World Asset) Tokenization Task Force with the Central Depository & Clearing Corporation and major banks to explore asset tokenization
Moreover, the FSC is exploring whether to regulate lending businesses under a new legal framework. Though not exclusively fintech-related, such rules could impact emerging models like "buy now, pay later" (BNPL) services.
Industry stakeholders should closely monitor upcoming consultations and legislative drafts as Taiwan positions itself as a forward-thinking fintech hub in Asia.
Frequently Asked Questions
Q: Do foreign fintech companies need a local presence in Taiwan?
A: Yes. Both VASPs and third-party payment providers must establish a local company or branch under the Company Act before operating.
Q: Are individuals allowed to invest in STOs?
A: Only professional investors can participate, with a maximum investment of NT$300,000 per offering.
Q: Is there a licensing requirement for P2P lending platforms?
A: Not yet. However, platforms must follow FSC risk management guidelines and cannot accept deposits or issue securities.
Q: Can banks partner with fintech firms in Taiwan?
A: Yes. Banks can collaborate with P2P platforms on escrow, credit evaluation, and lending services under industry self-regulation.
Q: What happens after a fintech company completes a sandbox experiment?
A: The FSC reviews results and may recommend legal reforms, but companies usually need proper licensing to launch commercially.
Q: Is cryptocurrency legal in Taiwan?
A: Yes. While not legal tender, virtual assets are recognized under AML laws, and regulated trading is permitted through registered VASPs.
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