Taiwan
Retail_Trading_Status
- Analysis ID
- #799
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- Created
- 2025-12-12 05:17
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- 241bedc4...
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Executive Summary
Retail cryptocurrency trading is legal in Taiwan and formally regulated under a mandatory registration regime enforced by the Financial Supervisory Commission (FSC). As of January 2025, all Virtual Asset Service Providers (VASPs) must complete strict Anti-Money Laundering (AML) registration or face criminal penalties, including imprisonment. While a comprehensive 'Virtual Asset Service Act' introducing full licensing is currently in the draft stage (expected late 2025/2026), the existing framework already imposes capital, internal control, and compliance requirements on operators.
Key Pillars
Financial Supervisory Commission (FSC) as the primary regulator
Mandatory AML Compliance Registration for all VASPs
Membership in the VASP industry association (Self-Regulatory Organization)
Prohibition on using credit cards for crypto purchases
Segregation of customer assets and internal control audits
Landmark Laws
Money Laundering Control Act (Amended Article 5) - Enacted: 2018-11-07
- Brought virtual currency platforms under the purview of AML regulations, granting the FSC authority to issue rules for VASPs.
- Source
Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform or Transaction (FSC Ruling No. 11002720471) - Enacted: 2021-06-30
- Established the initial AML compliance framework for VASPs, requiring customer due diligence, record keeping, and suspicious transaction reporting.
- Source
VASP AML Registration Regulations (New Registration Rules) - Enacted: 2025-01-01
- Replaced the previous 'compliance declaration' system with a mandatory registration regime. Imposes criminal liability (up to 2 years prison) for operating without registration.
Virtual Asset Service Act (Draft) (Draft Bill)
- Proposed legislation released in March 2025 to establish a full licensing regime, stablecoin issuance rules, and stricter consumer protections. Currently under review.
Considerations
Credit card purchases of crypto are effectively banned; banks are instructed not to process these payments.
Income from crypto trading is taxable for individuals under 'income from property transactions' if sourced in Taiwan.
Stablecoin issuance is currently restricted; the Central Bank and FSC are drafting specific rules to allow banks to issue them in the future.
Foreign VASPs cannot solicit business in Taiwan without setting up a local subsidiary and obtaining registration.
Notes
The status is marked as 'Allowed-Regulated' because although the full 'licensing' law is still a draft, the mandatory 'registration' regime effective Jan 2025 functions as a de facto license with criminal sanctions for non-compliance. The 'Gray-Zone' label is inappropriate because the government has explicitly authorized compliant entities to operate.
Remaining Uncertainties
- The exact enactment date of the comprehensive 'Virtual Asset Service Act'.
- Specific capital requirements for the upcoming full licensing regime (distinct from current registration).
- Final rules regarding the issuance of stablecoins by non-bank entities.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading is legal and formally regulated in Taiwan under a mandatory registration regime enforced by the Financial Supervisory Commission (FSC). The regulatory status is definitively 'Allowed-Regulated,' as the government has explicitly authorized compliant Virtual Asset Service Providers (VASPs) to operate. While a comprehensive 'Virtual Asset Service Act' introducing a full licensing regime is currently in draft form and expected in late 2025 or 2026, the existing framework, effective from January 2025, imposes a strict Anti-Money Laundering (AML) registration requirement that functions as a de facto license, with criminal penalties including imprisonment for non-compliance. This mandatory registration replaced the previous 'compliance declaration' system, underscoring the formalization of the sector.The regulatory framework is built upon several key legislative pillars. The foundation was established with the 2018 amendment to the Money Laundering Control Act (Article 5), which brought virtual currency platforms under AML regulations and granted the FSC authority to issue rules. This was followed by the FSC's specific 'Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises Handling Virtual Currency Platform or Transaction' (FSC Ruling No. 11002720471) enacted on June 30, 2021, which set out the initial compliance framework requiring customer due diligence, record-keeping, and suspicious transaction reporting. The current, stricter regime is defined by the 'VASP AML Registration Regulations' which took effect on January 1, 2025. Beyond AML registration, VASPs must also become members of the industry's Self-Regulatory Organization, adhere to capital and internal control requirements, segregate customer assets, and undergo internal control audits.Important restrictions are firmly in place. A notable prohibition is on using credit cards to purchase cryptocurrency, with banks instructed not to process such payments. Furthermore, foreign VASPs are barred from soliciting business in Taiwan without establishing a local subsidiary and obtaining the necessary registration. Income from crypto trading is taxable for individuals under the category of 'income from property transactions' if the income is sourced in Taiwan. Regarding stablecoins, issuance is currently restricted, though the Central Bank and FSC are drafting specific rules to potentially allow banks to issue them in the future.
Summary Points
I. Regulatory Status
* Retail cryptocurrency trading is legal and formally regulated in Taiwan.
* The status is Allowed-Regulated; compliant entities are explicitly authorized to operate.
* A mandatory AML registration regime, effective January 2025, functions as a de facto license with criminal penalties for non-compliance.
* A comprehensive licensing law (the Virtual Asset Service Act) is in draft stage, expected late 2025/2026.
II. Key Regulatory Bodies
* Financial Supervisory Commission (FSC): The primary regulator for the sector.
* VASP Industry Association: Functions as the mandatory Self-Regulatory Organization (SRO) for registered entities.
III. Important Legislation
* Money Laundering Control Act (Amended Article 5): Enacted November 7, 2018. Brought VASPs under AML oversight and granted the FSC rule-making authority.
* FSC AML/CFT Regulations for VASPs (Ruling No. 11002720471): Enacted June 30, 2021. Established the initial compliance framework for customer due diligence, record-keeping, and reporting.
* VASP AML Registration Regulations: Enacted January 1, 2025. Replaced the prior declaration system with a mandatory registration regime carrying criminal liability (e.g., up to 2 years imprisonment).
* Virtual Asset Service Act (Draft): Proposed legislation released March 2025 to establish a full licensing regime, stablecoin rules, and enhanced consumer protections. Currently under review.
IV. Compliance Requirements
* Mandatory AML Compliance Registration with the FSC for all Virtual Asset Service Providers (VASPs).
* Membership in the VASP industry association (the SRO).
* Adherence to capital requirements and internal control standards.
* Implementation of customer due diligence (CDD), transaction monitoring, and suspicious activity reporting (SAR).
* Segregation of customer assets from corporate funds.
* Submission to regular internal control audits.
V. Notable Restrictions or Limitations
* Payment Restrictions: A prohibition on using credit cards for cryptocurrency purchases; banks are instructed not to process these transactions.
* Market Access for Foreign Firms: Foreign VASPs cannot solicit business in Taiwan without establishing a local subsidiary and obtaining the required registration.
* Taxation: Income from cryptocurrency trading is taxable for individuals under the category of 'income from property transactions' if the income is sourced in Taiwan.
* Stablecoins: Issuance is currently restricted; specific rules to allow bank issuance are being drafted by the Central Bank and FSC.
VI. Recent Developments or Notes
* The shift from a 'compliance declaration' to a mandatory registration regime on January 1, 2025, marked a significant regulatory hardening.
* The pending 'Virtual Asset Service Act' draft bill represents the next major phase of regulatory development, aiming to introduce a formal licensing system.
* The 'Gray-Zone' label is considered inappropriate given the explicit regulatory authorization and enforcement framework now in place.
Full Analysis Report
Full Analysis Report
Taiwan has established a clear and enforceable regulatory framework for cryptocurrency, transitioning from a 'light-touch' AML approach to a robust registration and supervision regime. The primary regulator, the Financial Supervisory Commission (FSC), oversees the sector. Retail trading is permitted, and major exchanges operate legally provided they comply with strict Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. The regulatory environment tightened significantly on January 1, 2025, when new rules came into effect mandating formal registration for all Virtual Asset Service Providers (VASPs). Unlike the previous system which relied on 'compliance declarations,' the new regime imposes criminal penalties, including imprisonment of up to two years, for non-compliant operators.
Under the current framework, VASPs must demonstrate robust internal controls, segregation of customer assets, and information security standards to achieve registration. As of late 2024, approximately 26 VASPs had successfully completed the earlier compliance declarations and are now transitioning to the new registration status. The FSC has also mandated that VASPs join the local industry association, which acts as a Self-Regulatory Organization (SRO) to enforce codes of conduct. This dual-track approach of government supervision combined with industry self-regulation is a hallmark of Taiwan's strategy.
Despite the legal status of trading, the government maintains specific restrictions to mitigate risk. Most notably, the FSC has prohibited the use of credit cards for purchasing virtual assets, viewing them as speculative commodities rather than currency. Banks are instructed to decline such merchant codes. Additionally, the tax treatment of crypto assets remains based on general income tax principles; gains are treated as 'income from property transactions' for individuals. However, enforcement on foreign platforms remains a challenge due to the territorial nature of Taiwan's tax system.
Looking ahead, the regulatory landscape is set to evolve further with the 'Virtual Asset Service Act.' A draft of this special law was released in March 2025 and is expected to pass through the Legislative Yuan in late 2025 or 2026. This act will upgrade the current registration system to a full licensing regime, classify VASPs as financial institutions, and introduce specific regulations for stablecoin issuers, potentially allowing banks to enter this space. Until this act is fully implemented, the enhanced AML registration rules serve as the primary legal gatekeeper.
Taiwan has established a clear and enforceable regulatory framework for cryptocurrency, transitioning from a 'light-touch' AML approach to a robust registration and supervision regime. The primary regulator, the Financial Supervisory Commission (FSC), oversees the sector. Retail trading is permitted, and major exchanges operate legally provided they comply with strict Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. The regulatory environment tightened significantly on January 1, 2025, when new rules came into effect mandating formal registration for all Virtual Asset Service Providers (VASPs). Unlike the previous system which relied on 'compliance declarations,' the new regime imposes criminal penalties, including imprisonment of up to two years, for non-compliant operators. Under the current framework, VASPs must demonstrate robust internal controls, segregation of customer assets, and information security standards to achieve registration. As of late 2024, approximately 26 VASPs had successfully completed the earlier compliance declarations and are now transitioning to the new registration status. The FSC has also mandated that VASPs join the local industry association, which acts as a Self-Regulatory Organization (SRO) to enforce codes of conduct. This dual-track approach of government supervision combined with industry self-regulation is a hallmark of Taiwan's strategy. Despite the legal status of trading, the government maintains specific restrictions to mitigate risk. Most notably, the FSC has prohibited the use of credit cards for purchasing virtual assets, viewing them as speculative commodities rather than currency. Banks are instructed to decline such merchant codes. Additionally, the tax treatment of crypto assets remains based on general income tax principles; gains are treated as 'income from property transactions' for individuals. However, enforcement on foreign platforms remains a challenge due to the territorial nature of Taiwan's tax system. Looking ahead, the regulatory landscape is set to evolve further with the 'Virtual Asset Service Act.' A draft of this special law was released in March 2025 and is expected to pass through the Legislative Yuan in late 2025 or 2026. This act will upgrade the current registration system to a full licensing regime, classify VASPs as financial institutions, and introduce specific regulations for stablecoin issuers, potentially allowing banks to enter this space. Until this act is fully implemented, the enhanced AML registration rules serve as the primary legal gatekeeper.
Source Evidence
Primary and secondary sources cited in this analysis
"A VASP that has not carried out registration with the FSC... may not continue to operate business."
"Financial institutions and other designated nonfinancial businesses or professions shall apply customer due diligence measures."
"Credit card acquirers should not provide credit card services for purchase of crypto-assets."
"On November 27, the Financial Supervisory Commission (FSC) brought forward the registration deadline... VASPs that fail to register could face penalties including fines or prison."
"The Draft Act mandates that Virtual Asset Service Providers must obtain approval from the FSC for their operations."
Web Sources (10)
Sources discovered via web search grounding
Search queries used (5)
- Taiwan crypto tax rules for individuals 2025
- Taiwan ban on crypto payments or stablecoins
- Taiwan cryptocurrency regulation retail trading status 2024 2025
- Taiwan Virtual Asset Management Bill passed 2025
- Taiwan FSC VASP registration list and requirements 2025
https://www.binance.com/en/square/post/19317444884777
https://www.kryptogo.com/en/blog/taiwan-vasp-regulation-evolution
https://www.theblock.co/post/319285/taiwans-fsc-drafts-new-crypto-aml-rules-requiring-firms-to-register-or-face-jail-time
https://thearabianpost.com/taiwan-outlines-regulated-stablecoin-plan-for-2026-launch/
https://thepaypers.com/fraud-and-fincrime/news/taiwan-fast-tracks-new-aml-regulations-for-crypto-businesses
https://topics.amcham.com.tw/2025/09/virtual-asset-services-act-shaping-taiwans-digital-assets-future/
https://topics.amcham.com.tw/2025/03/taiwan-tiptoes-toward-tougher-digital-asset-rules/
https://www.globallegalinsights.com/practice-areas/blockchain-cryptocurrency-laws-and-regulations/taiwan/
https://blockworks.co/news/taiwan-bans-crypto-purchases-using-credit-cards
https://www.taipeitimes.com/News/biz/archives/2024/11/19/2003827113