The Taiwan FSC plans to propose a draft law in June 2025, allowing local banks to issue stablecoins tied to the new Taiwan dollar.
According to a report from local media outlet Money UDN, the Taiwan Financial Supervisory Commission wants to introduce a draft law covering virtual asset service provision or VASP. One of the major highlights included is a law that would allow banks to issue their own stablecoins.
Chairman of the Taiwan FSC, Peng Jinlong, stated that stablecoins will be used as a bridge that connects the gap between fiat currencies and cryptocurrencies, making it easier for investors to access the crypto trading market. In the case of Taiwan, stablecoins issued by local banks will be pegged to the new Taiwan dollar instead of the U.S. dollar.
Peng said that all locally-issued stablecoins will be jointly managed by the Taiwan central bank.
Director of the central bank in Taiwan, Zhuang Xiuyuan, criticized the popular stablecoins circulating on the market, such as Tether (USDT) and USD Coin (USDC). He said that those stablecoins are often declared as legitimate U.S dollar assets by the firms issuing them, not by the government. Therefore, all future stablecoins issued by Taiwan firms must first be approved by the FSC before launching on the market.
In order for stablecoins to gain approval from the Taiwan FSC, they must meet certain requirements, including including issuer firm qualifications, token reserve allocation and many more that will be stipulated in the draft law.
When asked whether Taiwan citizens will be able to use stablecoins for every day transactions, moving from the virtual economy into the “real” economy, Zhuang said that there are still certain hurdles such as monetary policy and financial stability that need to be further resolved by the central bank.
As previously reported by crypto.news, the Taiwan FSC reportedly planned to create a pilot program for banks to offer crypto custody services, expected to start applications in the first quarter of 2025.
Taiwan’s regulations for virtual assets, titled “VASP Registration Regulations” reportedly came into effect in early January 2025. These set of rules are meant to regulate virtual asset service providers, such as crypto exchanges, trading platforms, and crypto custodians.
Under the new rules, VASPs must adhere to strict anti-money laundering protocols and submit annual risk assessment reports.
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