Taiwan stablecoins could launch as early as 2026! FSC: Banks will be given priority to issue them.

Financial Supervisory Commission Chairman Peng Jinlong revealed on December 3 that the Taiwan version of stablecoins may debut as early as the second half of 2026. The FSC confirmed that banks will take the lead in issuing stablecoins. Currently, the draft Virtual Asset Service Act has entered the final stage of review at the Executive Yuan. If the third reading process is completed smoothly, the FSC will complete eight sub-laws, including the Stablecoin Issuance License Management Measures, within six months.

Countdown to Special Law Passage—Eight Sub-Laws to be Completed in the First Half of 2026

The legalization process for Taiwan’s virtual asset market has entered a critical stage. Peng Jinlong pointed out that the draft Virtual Asset Service Act is now in the final review phase at the Executive Yuan, and there is a high degree of consensus within the Executive Yuan on the bill. If it can be successfully included in the legislative agenda this session and the third reading is completed next session, Taiwan’s virtual asset regulation will take a historic step forward.

However, passage of the third reading is only the first step. Peng further explained that after the main law is passed, the FSC will still need to formulate eight sub-laws, including the Stablecoin Issuance License Management Measures, based on the authorization of the special law. This legislative buffer period is expected to take six months. In other words, if the legislative process goes smoothly, the relevant sub-laws could be completed as early as the first half of 2026, meaning the first batch of compliant Taiwan stablecoins could officially enter the market in the second half of 2026.

The draft Virtual Asset Service Act, considered the “constitution” of Taiwan’s crypto industry, is heavily modeled after the EU’s Markets in Crypto-Assets Regulation (MiCA) and regulatory frameworks from the US, Japan, Singapore, and Hong Kong. The draft clearly defines the legal status of stablecoins, considering them as “virtual assets pegged to the value of fiat currency,” and requires issuers to establish and maintain sufficient reserve assets.

Taiwan Stablecoin Legislation Timeline

Late 2025 to Early 2026: Virtual Asset Service Act passes third reading

First Half of 2026: FSC formulates 8 sub-laws (takes six months)

Second Half of 2026: First batch of Taiwan stablecoins officially launches

Issuing Entities: Banks and other financial institutions will have priority in pilot issuance

To ensure financial stability, future issuers of stablecoins in Taiwan must first apply for regulatory approval. For stablecoins issued overseas (such as USD stablecoins), regulatory consent must also be obtained before trading in Taiwan. These regulations aim to build a safe, transparent, and internationally competitive virtual asset market in Taiwan.

Bank-First Strategy and Risk Control Logic

Regarding stablecoin issuers, Taiwan has adopted a “prudent first, open later” approach. Although the draft Virtual Asset Service Act, referencing EU MiCA, does not explicitly restrict non-financial institutions from issuing stablecoins, the FSC and the central bank have reached a high level of consensus: In the initial regulatory stage, banks and financial institutions will be given priority to issue stablecoins.

Peng emphasized that although the law does not exclude non-financial entities, considering the potential systemic risk stablecoins could pose to Taiwan’s financial system, piloting with highly regulated financial institutions is the safer approach. Currently, some banks have already expressed strong interest in issuing stablecoins, making it highly likely that Taiwan’s first stablecoins will be led by the banking system, creating a so-called “stablecoin cohort.”

There is deep logic behind this “bank first” strategy. First, banks are already strictly regulated by the FSC, with robust internal controls, capital adequacy requirements, and regular audits. These existing frameworks can directly extend to stablecoin operations, reducing regulatory costs and risks. Second, banks have a large customer base and mature KYC (Know Your Customer) systems, enabling rapid and compliant rollout of stablecoins. Third, banks have strong capital strength and can maintain sufficient reserve funds, reducing the risk of a run.

However, this approach has its trade-offs. Bank-issued stablecoins may lack innovation and flexibility, as bank culture is typically conservative and decision-making processes are slow. In contrast, fintech and crypto-native firms may iterate products and explore new use cases more quickly. This balance between innovation and prudence is a challenge all regulators must face.

Strategic Choice: Peg to USD or TWD

The biggest challenge facing Taiwan’s cohort is which currency stablecoins should be pegged to. Regulators have not yet decided whether to issue “USD stablecoins” or “New Taiwan Dollar stablecoins.” Pegging to the US dollar has the advantage of bypassing Taiwan’s most difficult financial issue: restrictions on offshore circulation of the New Taiwan Dollar. For years, the central bank has strictly controlled TWD’s offshore circulation and trading to maintain exchange rate stability and prevent unofficial offshore pricing.

Another advantage of USD stablecoins is global acceptance. USDT and USDC are the world’s largest stablecoins precisely because of the dollar’s international reserve currency status. Taiwan bank-issued USD stablecoins could be used globally, opening international markets for Taiwan’s financial sector. Furthermore, Taiwan has large USD reserves (over $500 billion in forex reserves), making issuance technically feasible.

Conversely, issuing a TWD stablecoin could meet domestic payment, transfer, and fintech development needs and help safeguard digital sovereignty. However, its inherent capability for fast cross-border settlement would directly challenge the central bank’s decades-long forex controls. If TWD stablecoins circulate offshore and develop market pricing, the central bank’s control over the exchange rate would be weakened—this is the central bank’s biggest concern.

How to balance promoting financial innovation and maintaining monetary policy independence will be the core issue the FSC and central bank must solve in the next six months. Possible compromises include: first issuing USD stablecoins to test the waters, then deciding whether to launch TWD stablecoins; issuing “dual-currency stablecoins,” using TWD domestically and USD overseas; or imposing strict offshore usage restrictions and monitoring for TWD stablecoins.

Kuo Ju-chin Advocates for Bitcoin Strategic Reserves

With Trump proposing “Bitcoin strategic reserves” during the US presidential election, this trend has reached Taiwan’s Legislative Yuan. During discussions on the Taiwan stablecoin bill, KMT legislator Kuo Ju-chin publicly called for the government to consider including Bitcoin as a strategic reserve. He pointed out that as Bitcoin’s market cap continues to rise and more countries and institutions see it as a hedge against economic uncertainty, Taiwan should not ignore this global trend.

Kuo further urged the government to quickly investigate and handle Bitcoin assets seized in criminal cases by the judiciary. Law enforcement has accumulated large amounts of seized crypto assets from anti-fraud and anti-money laundering cases, but their handling has lacked clear policy guidelines. In response, Premier Cho Jung-tai promised updated information and findings by year-end.

This shows that the Taiwan government, when facing virtual asset issues, is no longer simply focused on prevention and regulation, but is also beginning to passively or actively consider incorporating these emerging assets into strategic resources. The narrative of Bitcoin as “digital gold” is gaining mainstream acceptance. As countries like El Salvador and the Central African Republic have made Bitcoin legal tender and multiple US states are legislating Bitcoin strategic reserves, Taiwan indeed needs to assess whether to follow suit.

However, Taiwan’s situation is fundamentally different. Taiwan has over $500 billion in forex reserves, the fifth largest globally, and does not lack reserves. The main argument for holding Bitcoin as a reserve is to hedge fiat devaluation, but TWD is one of the world’s stronger currencies, with recent appreciation pressure outweighing devaluation. In this context, the necessity of allocating Bitcoin deserves careful consideration.

Learning from International Regulations to Avoid Another TerraUSD

From the recent US GENIUS Act to the implementation of the EU’s MiCA, countries and regions worldwide are accelerating the construction of crypto regulatory frameworks. Taiwan’s new legislation clearly requires stablecoin issuers to undergo regular audits, maintain sufficient reserves, and report detailed issuance data and disclosures to the regulator. This aligns with mainstream international regulatory logic and aims to avoid a repeat of the TerraUSD collapse.

The collapse of TerraUSD (UST) was the most painful lesson in stablecoin history. This algorithmic stablecoin, once valued at over $18 billion, lacked sufficient reserves and relied entirely on arbitrage to maintain its peg. In May 2022, when market confidence collapsed, UST depegged and quickly went to zero, wiping out billions in investor funds. This disaster prompted global regulators to reassess stablecoin risks and generally require full reserves and regular audits.

Taiwan’s regulatory design has learned this lesson. Stablecoin issuers are required to hold 100% or more in reserve assets, which must be in cash, short-term government bonds, or other highly liquid, low-risk assets. Regular audits ensure issuers do not misappropriate reserves for risky investments. Detailed information disclosure allows regulators and the public to monitor stablecoin health in real time.

Frequently Asked Questions (FAQ)

How does Taiwan’s stablecoin compare internationally?

Taiwan references the EU’s MiCA and the US GENIUS Act, adopting an international-standard regulatory framework. Bank issuance ensures capital strength and compliance, but compared to stablecoins already operating in Singapore and Hong Kong, Taiwan lags by about 2-3 years. The key will be execution speed and room for innovation. If launched smoothly in the second half of 2026 and cross-border use is allowed, Taiwan could still claim a place in the Asian market.

Why choose banks instead of fintech companies to issue?

To control risk, the FSC is giving banks, which are strictly regulated, priority for pilots. Banks have robust internal controls, sufficient capital, and mature KYC systems, reducing systemic risk. If the operation goes well, issuance may gradually open to qualified fintech companies or VASP operators.

What’s the impact on users if stablecoins are pegged to USD or TWD?

USD peg: Can circulate internationally, suitable for cross-border payments and crypto trading, but does not promote TWD internationalization. TWD peg: Supports digital sovereignty, good for Taiwan payments and financial innovation, but faces central bank foreign exchange control challenges and possible cross-border use restrictions. Users needing international transactions should choose USD version; for use in Taiwan, choose TWD version.

Should Taiwan establish a Bitcoin strategic reserve?

Very controversial. Supporters see Bitcoin as a hedge against fiat depreciation and geopolitical risk, and say Taiwan should not miss the global trend. Opponents point out Taiwan’s forex reserves are ample ($500 billion, 5th in the world), Bitcoin is highly volatile and not suitable for reserves, and purchases could drive up prices and cause losses. The Executive Yuan has promised an assessment report by year-end.

What can be done after Taiwan stablecoins are launched?

Taiwan payments and transfers (replaces traditional bank transfers, 24/7 real-time settlement), cross-border remittance (lower fees and faster), DeFi applications (lending, liquidity mining), crypto trading (as a trading pair currency), corporate treasury management (efficient fund allocation tool).