Blockchain 2025 Comparisons

In recent years, the government of Taiwan has adopted an increasingly stringent and proactive approach toward the regulation of virtual assets service providers (VASPs). They have largely done so in response to the increasing number of illegal fundraising cases, fraud cases, money laundering activities and civil disputes involving virtual assets. These concerns have been further magnified by high-profile exchange failures, most notably the collapse of FTX, which exposed significant risks to investor protection and market integrity.

Virtual assets that do not qualify as securities under Taiwan law are currently primarily governed by the Money Laundering Control Act (MLCA). A significant amendment to the MLCA was enacted in 2024. This introduced new registration and compliance obligations for VASPs. VASPs are now required to complete anti-money laundering (AML) registration with the Financial Supervisory Commission (FSC) before commencing any business operations. Engaging in virtual asset services without completing this AML registration constitutes a violation of the MLCA and may subject operators to criminal liability.

In light of this amendment, a large number of existing VASPs have submitted their registration applications already and the FSC is expected to announce the results of the registration reviews by the end of September 2025 at the latest.

In addition to strengthening AML oversight, the FSC has also published a draft bill for a dedicated piece of legislation called the Virtual Asset Service Act. This proposed law will introduce a comprehensive licensing regime for VASPs and is intended to provide a clearer legal foundation for the regulation of the virtual asset industry. There is currently a public consultation on the draft bill and while its passage remains uncertain, it signals a shift toward a more formalised and robust regulatory framework in Taiwan.

The adoption of blockchain technology in Taiwan has so far been concentrated mainly in the area of virtual assets, while applications of blockchain that are unrelated to virtual assets remain relatively limited and are still in the early stages of development.

In terms of virtual assets, the local ecosystem has seen gradual growth and there are currently approximately 20 virtual asset platforms or exchange service providers operating in the Taiwanese market. These platforms facilitate the trading, custody and transfer of digital assets and have played a key role in shaping Taiwan’s virtual asset landscape. Non-fungible tokens (NFTs), in particular, experienced a surge in popularity between 2020 and 2022 locally in Taiwan. During this surge in popularity, several high-profile NFT issuance cases emerged. However, this momentum has since waned. Over the last two years, public and commercial interest in NFTs has significantly declined and there have not been any notable new NFT issuance cases reported during this time.

The FSC is currently actively promoting the tokenisation of real-world assets (RWAs). In June 2024, the FSC established the RWA Tokenisation Task Force to lead these efforts. This Task Force has collaborated closely with a range of local financial institutions to explore and evaluate the practical application of blockchain technology in the verification of business operations. In addition, the Task Force has been analysing the core features and emerging trends related to blockchain and tokenisation, aiming to identify potential regulatory and technical frameworks for future implementation.

According to various media sources, several private sector entities have already started experimental programmes involving the tokenisation of traditional financial instruments, including investment funds and bonds. These initiatives are not only intended to assess the feasibility of tokenising existing financial products but also to determine whether tokenisation can deliver on the promised benefits of blockchain technology, such as increased transparency, improved efficiency, reduced transaction costs and enhanced liquidity in the financial system. The outcomes of these efforts are expected to inform future regulatory developments.

There are currently no court decisions, regulatory guidelines or specific statutory provisions in Taiwan that offer a detailed legal analysis concerning the ownership rights or transactional finality of digital assets transferred through a blockchain network using a private cryptographic key. The legal framework surrounding these transactions remains underdeveloped and questions regarding the enforceability of ownership claims or the resolution of disputes involving blockchain-based transfers have yet to be formally addressed by Taiwanese courts. However, from a practical standpoint, if a digital asset is successfully transferred from one digital wallet to another through the proper use of a private key, this type of transaction is generally presumed to be final and valid. Nonetheless, the lack of legal clarity poses potential challenges in dispute resolution.

The primary distinction regarding the characterisation of digital assets in Taiwan is between tokens having the nature of securities (ie, security tokens) and tokens without the nature of securities (ie, non-security tokens).

For further details regarding security tokens, please see 2.3 Tokenised Securities.

Under the current regulatory framework in Taiwan, tokens that meet the existing legal definition of “securities” as set out in the Securities and Exchange Act are subject to the full scope of regulatory oversight administered by the FSC. In order to provide a structured and compliant environment for these tokens, the FSC has delegated authority to the Taipei Exchange (TPEx) to develop and enforce detailed rules and requirements governing both the issuing and secondary trading of security tokens.

These regulations are designed to ensure investor protection, market transparency and regulatory compliance. Due to the rather high regulatory thresholds and associated compliance burdens, market participation has remained limited. There has been only one officially approved security token issuance programme in Taiwan to date, which highlights the cautious and controlled approach taken by regulators toward this emerging form of digital asset.

As mentioned in 1.2 Business Models, the FSC is also actively promoting a RWA tokenisation initiative. This initiative aims to explore whether the tokenisation of traditional securities can effectively realise the advantages of blockchain technology, such as enhanced transparency, efficiency and accessibility.

There is no explicit legal definition of stablecoins under current laws in Taiwan.

However, the draft Virtual Asset Service Act published by the FSC, defines stablecoins as “virtual assets whose value is linked to one or more fiat currencies in order to maintain value stability.” The draft Virtual Asset Service Act requires stablecoin issuers to establish and maintain sufficient reserve assets, which must be held in domestic financial institutions.

These reserve assets must be segregated from the issuer’s own assets and are subject to regular audits. Furthermore, if the total amount of stablecoins issued by an issuer reaches a certain threshold, the reserve assets must include fully funded reserves.

The legal classification of NFTs in Taiwan is highly dependent on their specific characteristics, terms and intended use and cannot therefore be universally generalised. Under the MLCA, NFTs that are not used for payment or investment purposes are generally less likely to fall within the scope of VASP regulations. These types of NFTs are often used for collectibles, digital art or proof of authenticity and are typically considered lower risk from an AML perspective.

However, from a financial regulatory perspective, the analysis becomes more complex when NFTs exhibit features commonly associated with investment products. For example, if multiple NFTs are linked to the same underlying asset and those NFTs are marketed or used in a way that suggests investment characteristics, they may be deemed investment instruments. In these cases, the NFTs could potentially fall under Taiwan’s financial regulatory regime and trigger compliance obligations under securities or other applicable laws.

Under the current legal framework in Taiwan, there are no explicit prohibitions that prevent the use of cryptocurrencies for payment purposes in general commercial transactions. This means that private parties may legally agree to use cryptocurrency as a form of consideration, provided the transaction does not involve regulated financial services or trigger AML obligations.

There are currently no judicial decisions that have provided in-depth analysis or discussion regarding the use of digital assets as collateral. However, both civil and criminal courts in Taiwan have generally recognised that digital assets possess property value, and therefore, theoretically, it is possible to create security interests over these assets.

However, the legal characterisation of digital assets under the Civil Code remains a cause for debate. Some courts have classified digital assets as “things” while others have regarded them as “rights.” As a result, the specific methods for creating security interests over digital assets may depend on the future development of judicial practice.

There have not yet been any court decisions in Taiwan that offer detailed analysis or legal interpretation regarding the enforceability of agreements involving digital assets or blockchain-based transactions. As a result, there remains a degree of legal uncertainty in this area. However, based on general principles of contract law, an agreement will likely be recognised as legally valid and enforceable providing there is clear mutual intention by the parties to enter into the agreement and all other essential elements required for a valid contract, such as offer, acceptance and legal capacity, are present. The courts will likely evaluate these agreements on a case-by-case basis.

According to the existing laws and regulations in Taiwan, licensed asset management companies (ie, securities investment trust enterprise and futures trust enterprises) are banned from investing in cryptocurrencies.

To foster fintech innovation and support the development of emerging financial services, the government of Taiwan enacted the Financial Technology Development and Innovative Experimentation Act (the “Sandbox Act”) in 2018. This legislation established a formal regulatory sandbox framework and was designed to encourage experimentation with novel fintech business models and technologies, while ensuring that consumer protection and financial stability were not compromised.

Under this framework, eligible fintech companies are permitted to conduct time-limited trials of their services and products in a controlled regulatory environment. During these trial periods, certain legal and regulatory requirements may be conditionally waived, subject to the oversight and supervision of the competent regulatory authority (the FSC). The aim is to provide a safe space for innovation while gathering empirical data to inform future regulatory adjustments.

Since the enactment of the Sandbox Act, the FSC has approved multiple blockchain-related projects for inclusion in the sandbox. Notable examples include a blockchain-based interbank fund transfer system, a blockchain-enabled fund exchange service and a group-buying platform for bond investments with blockchain as underlying technology. These initiatives highlight the government’s commitment to embracing blockchain technology and creating a regulatory environment conducive to innovation and responsible development in the fintech sector.

Digital assets without the nature of securities are regulated in Taiwan by the FSC through the AML regulatory framework. This AML regulatory framework aligns with the principles of the Financial Action Task Force (FATF). In 2019, Taiwan achieved a “Regular Follow-up” rating in the Asia/Pacific Group (APG) on Money Laundering evaluation. This was reaffirmed in 2021, indicating strong compliance with the FATF standards.

The government regulatory body related to blockchain in Taiwan is mainly the FSC and the Ministry of Digital Affairs (MODA).

The FSC

The FSC regulates financial products and services, including those involving blockchain and digital assets.

• Where digital assets are considered to be securities, the FSC, through its Securities and Futures Bureau, enforces the provisions of the Securities and Exchange Act. The issuing and trading of these security tokens must comply with the requirements of the Securities and Exchange Act. The FSC has also authorised the TPEx to promulgate and implement specific regulations for STOs.
• For digital assets without the nature of securities, the FSC regulates a VASP primarily under the AML framework.

The MODA

The MODA is primarily responsible for advancing the application of digital technologies and promoting national digital transformation. While the MODA actively fosters the growth and adoption of digital innovations, such as by organising Web3-related events, it does not presently possess direct regulatory or supervisory authority over VASPs or digital assets.

The Taiwan Virtual Asset Service Provider Association (the “VASP Association”) functions as a self-regulatory organisation (SRO) with the primary goal of promoting responsible practices and ethical standards within the virtual asset industry. It is tasked with the development, implementation and continuous refinement of self-regulatory standards designed to strengthen industry self-discipline and foster public trust.

These standards include comprehensive rules and guidelines covering key areas such as AML, anti-fraud measures, and consumer protection protocols, which are critical to maintaining the integrity and security of the virtual asset ecosystem. In addition to setting industry norms, the VASP Association plays an important liaison role by maintaining ongoing communication and co-operation with the FSC and other relevant government agencies.

Through this engagement, the VASP Association not only helps ensure compliance with regulatory expectations but also provides a formalised platform through which the industry can articulate its viewpoints, challenges and policy recommendations to regulators.

As referenced in 1.2 Business Models, the FSC has established a RWA Tokenisation Task Force, which is currently implementing projects to assess whether the tokenisation of traditional securities can effectively realise the advantages offered by blockchain technology.

In response to the growing global trend of financial institutions, including banks and other regulated entities, entering the virtual asset space, particularly in the area of custody services, the FSC has taken a proactive step by launching a pilot programme to assess the feasibility and regulatory implications of these services. This initiative reflects the FSC’s recognition of the increasing demand for secure and compliant custody solutions in the virtual asset market and its intention to ensure that Taiwan keeps pace with international developments.

Under this pilot programme, eligible financial institutions will be able to apply to offer virtual asset custody services within a controlled and supervised environment. The application window is open from 1 January 2025 to 30 April 2025. There is no cap on the number of applicants to encourage the broadest possible participation from interested institutions. The pilot is designed to run for a period of six months. During this time the FSC will closely monitor operational practices, compliance standards and risk management mechanisms. An estimated review period of approximately two months will follow.

Based on the data, feedback and regulatory insights gathered, the FSC will evaluate whether to formally open the market for financial institutions to provide virtual asset custody services on a wider scale.

Recent cases in Taiwan have addressed crimes under the Banking Act, fraud and violations of AML laws, with significant controversy when cryptocurrencies are involved. The interpretation of illegal deposit-taking under the Banking Act does not explicitly encompass cryptocurrencies, creating legal ambiguity. One of the decisions of the Taiwan High Court ruled that Bitcoin does not constitute “payments” or “funds” under the Banking Act and therefore falls outside of the Act’s deposit-taking provisions.

However, according to news reports, there appear to be criminal cases where businesses have been prosecuted by prosecutors for violating banking laws by receiving virtual assets. The judicial results of these types of case are likely to affect the feasible business models of Taiwan’s virtual asset industry in the future, so future developments are worth paying attention too.

See 5.1 Judicial Decisions and Litigation.

The tax regime in Taiwan has not been specifically amended to address blockchain technology or digital assets. As a result, the taxation of these assets is generally subject to interpretation under existing regulations. One major uncertainty arises when virtual assets are sold on local trading platforms and the seller cannot provide documentation for the initial purchase cost. It becomes challenging to determine the taxable income derived from the transaction.

The Ministry of Finance (MOF) has indicated that tax reporting obligations for virtual assets could be introduced once virtual asset trading platforms and exchanges fully adopt real-name verification in line with the AML regulations applicable to VASPs. As a result, regulatory measures concerning the taxation of virtual assets are expected to be implemented in the foreseeable future.

There are no ESG/sustainable finance-related legal or regulatory requirements in Taiwan. There is room for the issuance of security tokens under Taiwanese law and although Taiwan has some ESG or perpetual-related disclosure regulations, these are not applicable to security tokens.

Whether the right to be forgotten does exist under Taiwan’s Personal Data Protection Act (PDPA) is still a subject of debate. However, the PDPA explicitly states that a data subject has the right to request a government or non-government agency delete their personal data.

In terms of the application to use blockchain-based products or services, due to the “immutability” of the blockchain technology, whether any personal data may be successfully deleted will depend on the individual products or services.