Taiwanese lawmakers on Tuesday passed a law to establish a regulatory framework for crypto, which includes licensing and rules for stablecoins.
Taiwan’s financial watchdog, the Financial Supervisory Commission (FSC), said that the Legislative Yuan passed the law requiring all virtual asset service providers, or VASPs, to get approval from the regulator to operate.
The law also says stablecoins issued in Taiwan must get approval from the central bank and the FSC, and issuers must maintain sufficient reserves with a trustee and undergo regular audits.
The law is the first to regulate crypto and stablecoins in Taiwan, bringing it in line with other governments in the region, such as Japan, Singapore and Hong Kong, that have long passed laws to regulate the sector in a bid to attract the industry.
The FSC said the bill further strengthens the protection of traders’ rights and that issuing stablecoins will help Taiwan integrate with the international market and secure a place in the global crypto market.
Source: Cointelegraph
Taiwan’s rules outline seven types of VASPs, including exchanges, trading platforms, custodians and lenders, which will all be subject to rules for internal control and audits, cybersecurity systems, crypto listing and delisting rules, customer asset segregation and financial reporting.
The rules outlaw crypto-based fraud and price manipulation, with violators facing between three and 10 years in prison and fines ranging from about 10 million New Taiwan dollars ($300,000) to 200 million New Taiwan dollars ($6.3 million).
Those caught operating a VASP or issuing a stablecoin without a license face up to seven years in prison and fines of up to 100 million New Taiwan dollars ($3.1 million), Taiwan’s national news agency, CNA, reported on Tuesday.
Related: US ban on stablecoin yield could see others fill the void: Ledger exec
The implementation date of the bill is still to be determined, and the law will take effect only after it is published by the government’s executive branch.
The FSC said VASPs that complete anti-money laundering registration before the bill is implemented, and institutions that provide related services under the agency, should apply for a license within 12 months after the bill is implemented.
CNA reported that lawmakers also passed a resolution asking the FSC to propose a plan within a year outlining how the crypto industry can provide derivative crypto commodity services, with the aim of providing diversified investments and improving the sector’s health.
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