Are there as many as 5 versions of the "Virtual Asset Service Providers Act" draft? FSC: Stablecoin reserves and interest regulations are the key points

Author: Max, Crypto City FSC promotes transition to licensing system, establishes comprehensive regulatory framework for VASP Peng Jin-lung, Chairperson of the Financial Supervisory Commission (FSC), attended the Finance Committee of the Legislative Yuan on May 7 to deliver a special report on the "Promotion and Outlook of Fintech Development." The report pointed out that with the rapid evolution of emerging technologies, fintech has become a key factor in strengthening industrial competitiveness. The FSC's current policy focus lies in implementing financial and operational supervision for Virtual Asset Service Providers (VASP). According to the draft "Virtual Asset Service Act" reviewed and passed by the Executive Yuan in April 2025 and subsequently sent to the Legislative Yuan, Taiwan's regulation of virtual assets is ushering in a milestone transformation, officially shifting from the past "AML registration system" to a stricter "licensing system." This system transition includes clear transitional period regulations. Operators who completed AML registration before the new law takes effect must apply for a license from the competent authority within 9 months after the law's implementation and obtain the license within 18 months. Failure to complete the transition by the deadline will result in the inability to continue related business operations. (The draft versions provided by the TPP and Lin Szu-ming suggest obtaining the license within 15 months.) The FSC emphasized that this adjustment is essentially intended to establish a regular communication mechanism between the financial industry and VASP operators, ensuring that while virtual assets develop and innovate, risk management and consumer rights protection can be balanced. Peng Jin-lung stated that the FSC is actively creating a friendly development environment and will further enhance the innovation momentum of Taiwan's financial market through public-private partnerships. Legislative race under cross-party consensus, analysis of four major draft versions Currently, in addition to the Executive Yuan's version, there are four other draft versions of the special law proposed by different party caucuses and legislators in the Legislative Yuan, demonstrating a high degree of consensus between the ruling and opposition parties on establishing industry regulations. The TPP caucus, DPP legislator Lin Chu-yin, and KMT legislators Lin Szu-ming and Ko Ju-chun have each drafted versions of the "Virtual Asset Service Act." The TPP version emphasizes that the virtual asset market valuation once approached $2.5 trillion in January 2022, and even after being hit by major events such as the Terra Luna collapse and the FTX bankruptcy, the market scale has remained above $1 trillion. Therefore, establishing a sound regulatory system to protect the rights of traders is urgent. The versions from legislators such as Ko Ju-chun and Lin Chu-yin extensively refer to international legislative trends such as the EU (MiCA), Japan, South Korea, and Hong Kong, regulating the diverse nature of virtual assets. The Ko Ju-chun version pays special attention to the impact of virtual assets on traditional finance and the real economy, including application scenarios such as cross-border payments, financing and lending, and supply chain finance. Regarding administrative penalties, all versions have proposed severe penalties. Those who violate mandatory or prohibitive provisions may be fined up to NT$6 million, and may be ordered to make improvements within a time limit; failure to improve within the deadline may result in repeated penalties. This rigorous regulatory design aims to increase public trust in the virtual asset market and ensure the stability of the rule of law and financial order. Stablecoin regulation chapter becomes a highlight, strict requirements for reserves and interest In the draft special law, "Stablecoin Issuance and Management" is listed as an independent chapter, reflecting the competent authority's high regard for the risks of such assets. The FSC clearly stipulates that the issuance of stablecoins within Taiwan must be officially licensed. Issuers are required to maintain full reserve assets and issue and redeem at face value. To avoid stablecoins being mistaken for traditional bank deposits and to prevent speculative risks, the draft stipulates that stablecoin issuers may not pay interest to holders. In addition, operators must establish strict internal control, internal audit, and cybersecurity management systems, and must regularly report and disclose relevant financial and business information to ensure transparency. Regarding reserve requirements for stablecoin issuance, the draft designs a powerful deterrent mechanism. If an issuer fails to deposit sufficient reserves, the Central Bank will charge an annual interest rate of 5% on top of the announced minimum financing rate for the shortfall. In serious cases, administrative fines of NT$300,000 to NT$6 million will be imposed. This regulatory framework, which combines financial stability with cybersecurity resilience, aims to ensure the robust development of stablecoins in the Taiwan market. The FSC also pointed out that after the special law completes the legislative process, it will further formulate relevant authorized sub-laws to officially open applications for stablecoin issuance. Asset tokenization and AI lead the future, fintech innovation never stops In addition to building the legal framework, the FSC is simultaneously promoting experiments in Real World Asset (RWA