The Taiwan Financial Supervisory Commission (FSC) is set to make waves in the financial sector with its upcoming proposal to draft a law that will allow local banks to issue their own stablecoins pegged to the new Taiwan dollar. Scheduled for presentation in June 2025, this transformative regulation aims to bridge the gap between traditional fiat currencies and cryptocurrency, facilitating easier access for investors into the crypto market.
According to reports, the FSC’s Chairman, Peng Jinlong, emphasized that the implementation of stablecoins could significantly enhance the financial ecosystem in Taiwan. By tethering these digital currencies to the new Taiwan dollar, local banks will be empowered to create a stable and regulated environment for cryptocurrency transactions. This approach will fundamentally alter how cryptocurrencies are integrated into everyday financial activities, making the market more inviting for both investors and consumers.
In addition to allowing stablecoin issuance, the FSC’s proposed legislation includes stringent requirements for approval. Local banks must adhere to specified conditions regarding issuer qualifications and token reserve allocations. The regulations are designed to ensure robust oversight and management under the supervision of the Taiwan Central Bank, headed by Director Zhuang Xiuyuan. He has previously raised concerns about existing stablecoins like Tether and USD Coin, primarily criticizing their lack of government endorsement and potential risks to users.
As the cryptocurrency landscape evolves, the FSC has indicated that all future stablecoins must receive pre-approval before launching in the market. This step is crucial to safeguard financial stability and maintain effective monetary policy in Taiwan. While local citizens may aspire to use stablecoins for daily transactions, significant hurdles still exist. The central bank remains focused on addressing monetary policy challenges to ensure a seamless transition of these digital assets into the practical economy.
Furthermore, the FSC is actively expanding its regulatory framework for virtual asset service providers (VASPs), which came into effect in early January 2025. This robust legislative shift aims to ensure compliance with anti-money laundering protocols and mandate annual risk assessment reports from VASPs, fostering a secure trading environment. As Taiwan embarks on this innovative journey into the world of digital currencies, the introduction of stablecoin legislation marks a decisive moment in the country’s financial evolution.
