Highlight road to navigate the cryptography of Taiwan

Cryptocurrencies are currently not accepted as currencies in Taiwan. Since 2013, the posts of the Central Bank and the Financial Supervision Commission (FSC) agree that Bitcoin should not be considered as a currency, but a very speculative virtual “goods”.

Since 2014, local banks have been ordered by the FSC not to accept Bitcoin or to provide services related to cryptocurrency. The FSC announcements and subsequent decisions have confirmed the same view.

Otherwise, no laws or regulations have been officially promulgated or modified to specifically treat cryptocurrencies, with the exception of:

1. 1. Regulations governing tokens with the nature of the titles, which are commonly known as “security tokens”, and their offers commonly known as offers of safety tokens (STOS); And
   2. Regulations related to the fight against money laundering (AML) for virtual active service providers (VASP).

Token offers

The basic regulatory problem concerning an offer of token, such as an initial range of parts (ICO), is whether it would be considered as an offer of securities under the Taiwan securities regulations. If this is the case, it is subject to the Securities and Exchange Act (SEAL) of Taiwan.

If it is considered to be involving an offer and a issue of securities (tokens are therefore considered as security tokens), it would be an illegal fundraising activity in sea violation unless the STO regulations are respected.

Security tokens and Stos

In 2019, the FSC officially published a decision designating cryptocurrencies in a certain nature such as “titles” (that is to say security tokens) under the sea.

Consequently, security tokens refer to those who:

• • Use cryptography, the technology of the large distributed book or other similar technologies to represent their value which can be stored, exchanged or transferred via a digital mechanism;
  • Are transferable; And
  • Include all the following attributes of an investment:

1. 1. Financing provided by investors.
   2. Provide funding for a joint business or project.
   3. Investors expect to receive profits.
   4. Benefit mainly generated the efforts of the transmitter or third parties.

The FSC and the Taipei Exchange (TPEX) worked jointly on a set of regulations governing the STOs, which were finalized in 2020 and modified in 2023.

The regulations are differentiated by the threshold of 30 million NTD (930,000 USD). A STO of 30 million NTD or less can be carried out in accordance with STO regulations. A STO above 30 million NTD must first apply to be tested in the “Sand-based financial tank” and, if a positive result, led under the sea.

The main provisions for stos of 30 million NTD or less include:

1. 1. Qualifications. The issuer must be a company limited by actions incorporated into the laws of Taiwan and not registered on the Taiwan stock exchange or to the TPEX, or negotiated on the emerging stock market.
   2. Types that can be issued. Only sharing or debt tokens without rights of shareholders.
   3. Eligible investors and limits. Only professional investors are eligible; And when the professional investor is a natural person, the maximum subscription amount is 300,000 NTD per sto.
   4. Sto platform operator. Should obtain a license in concessionaire of securities, have a minimum paid capital of 100 million NTD and provide an obligation of 10 million NTD millions.
   5. Total amount of the offer. The total amount of all STOs on a single platform should not exceed 200 million NTD.
   6. Other requirements and restrictions include those concerning trading (secondary market), the actual basis, NTD only.

In particular, due to these relatively strict restrictions under the status regulations such as the qualifications of the issuer, the eligible investors and the limits of amount, as well as the compliance costs – a single STO program has been launched to date.

Anti-flow

Although the STO activities are limited, there have been cryptographic platform / exchange operators providing services related to cryptocurrencies that are not security tokens. As long as no safety jet is involved, there are no laws or regulations which specifically deal with the exchange of cryptocurrencies – so no license is required to operate cryptographic platforms / exchanges.

However, the law on the control of money laundering (AML law), the main law governing money laundering, sinning in the LMA regulatory regime of Taiwan.

In accordance with the current FSC regulations under the LMA Act, the scope of Vasps covers those who engage:

1. 1. Exchange between virtual assets and new taiwan, foreign currencies or the currencies issued
      by continental China, Hong Kong
      or Macao;
   2. Exchange between virtual assets;
   3. Transfer of virtual assets;
   4. Cust on sight and / or administration of virtual assets or providing instruments allowing the control of virtual assets; And
   5. The participation and provision of financial services linked to the issue or sale of virtual assets.

In 2024, the FSC introduced new rules under the AML law forcing Vasp to register with the FSC before offering virtual services related to assets such as operating scholarships, trading platforms, transfer services, childcare services or subscription activities.

Failure can lead to criminal sanctions, including an imprisonment of up to two years, fines of up to 5 million NTDs, or both.

In response, many existing vasps have submitted requests, the FSC should announce the approvals no later than September 2025.

In addition, regulations impose several operational obligations on Vasps.

These include:

1. 1. establish internal control systems and audit mechanisms;
   2. Implementation of your customer’s knowledge procedures (KYC);
   3. Maintain the appropriate transaction records;
   4. continue to monitor customer activities; And
   5. reporting both large transactions and suspicious activities to the authorities.

Latest developments

To lay the foundations for Vasp Future regulations, the FSC has published guidelines concerning a wide range of questions, in particular:

1. 1. Obligations on virtual asset issuers, such as the publication of a white paper;
   2. Review the mechanisms for vasps before listing or launching new virtual assets;
   3. the requirements to separate assets from customers from Vasp funds;
   4. Ensure equity and transparency of transactions;
   5. Operational management standards, including cybersecurity and management of hot and cold portfolios;
   6. disclosure obligations;
   7. the establishment of internal controls and audit systems; And
   8. Extension of certain compliance tasks with offshore basins.

Based on this foundation, the FSC moved to tighten surveillance by writing a law dedicated to VASPS, announced in March 2025.

The proposed legislation focuses on minimum capital thresholds, qualifications for people responsible for VASP and beneficiaries and improving consumer protection.

Once adopted, this law would transfer the current system of a basic registration framework (within the framework of the AML regime) to a complete license regime, forcing VASP to obtain regulatory approval before providing virtual asset services.

However, it remains uncertain if and when the draft legislation will be successfully adopted in the legislative yuan (the congress) in Taiwan.

Defi and NFT

New applications for cryptocurrency and blockchain technology such as DEFI (decentralized finance) and the NFT (non-tumbled tokens) have also been strongly discussed.

Although no official point of view of the government has been announced on the rise of defi, from a local point of view, its classification should be determined by case, and laws such as those relating to banks, trustees and future should be examined to verify and ensure compliance with Taiwan law.

Market players could say that in a DEFI structure, no centralized commercial operator should be held responsible for any activity, illegal or not. But from a legal point of view, this should be more a factual / obvious affair, which means that the possibility that any person who initiates (or then plays a major role) in a DEFI project can always be considered as the real “actor” with regard to the potential legal consequences.

Regarding NFT, the discussion focuses on what a NFT holder has or obtained – whether digital works of art, music works, collectibles, baseball / basketball cards, photo albums and others. In this case, the classification of any NFT or its offer should also be examined on a case -by -case basis.

Although there may be various ways to structure an NFT (such as the definition of “underlying assets”), it is suggested that the rights and obligations of the participating parties – namely issuers, platform operators and / or service / technologies providers – are clearly identified / stipulated in terms and conditions, in particular from the point of view of copyright.

In addition, notwithstanding the nature of any NFT being not brutally and unique, the applicability of financial law, such as securities regulations, cannot be excluded either.

Finally, it is not difficult to know if the DEFI market players would be the scope of the regulations linked to the aforementioned LMA, creating an uncertainty for the future development of these emerging activities from a regulatory point of view.