Banks in Taiwan will soon be able to issue and manage stablecoins, according to the Financial Supervisory Commission (FSC).
Taiwan’s government, via the Financial Supervisory Commission, will propose a virtual asset service provision later in the year to allow its banks to issue and manage stablecoins in the Asian country.
This also includes offering custody services for cryptocurrencies. The plan is part of a pilot program introduced by the Financial Supervisory Commission (FSC), Taiwan’s top financial regulator.
If the draft law is passed, Taiwanese banks would be able to issue stablecoins based on the Taiwan dollar, which will be backed by the Taiwan dollar, like USDC and USDT, which are backed by the US dollar. This stability makes them useful for people wanting to enter the world of digital assets without worrying about price swings.
Peng Jinlong, the chairman of Taiwan’s Financial Supervisory Commission, shared plans for the future of virtual asset trading. He stated that investors will soon have a clearer “entry point” into the market. This “entry” will involve using stablecoins as a bridge between the New Taiwan Dollar (TWD) and virtual currencies.
By doing so, stablecoins will make it easier for investors to trade in the virtual asset market, simplifying the process of moving between traditional money and digital currencies. This shift aims to enhance the accessibility and flow of investment in Taiwan’s digital asset market.
Zhuang Xiuyuan, the director of a Taiwanese bank, pointed out that stablecoins currently circulating in the market, like USDC (a U.S. dollar-backed stablecoin) and USDT (Tether), are not officially approved by authorities. These coins are claimed by their issuers to be backed by U.S. dollar assets, but they haven’t gone through official approval processes.
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Once the laws are updated in the future, any stablecoins issued in Taiwan will need to get approval from the Financial Supervisory Commission (FSC). This will involve checking the qualifications of the companies issuing these coins and how they manage the assets backing them.
Zhuang also mentioned that whether stablecoins can become a part of the real economy, rather than just existing in the virtual space, involves important issues like monetary policy and financial stability. These concerns will need to be addressed in discussions with Taiwan’s central bank. Peng Jinlong added that the central bank will work with other authorities to manage stablecoins together.
Starting January 1, 2025, Taiwan implemented comprehensive anti-money laundering regulations for cryptocurrency companies. All digital asset firms must now register with government authorities or face strict legal consequences.
Companies failing to comply will encounter significant penalties, including potential imprisonment of up to two years and substantial fines reaching NT$5 million (approximately $155,900). These measures demonstrate Taiwan’s commitment to creating a transparent and accountable cryptocurrency ecosystem.
