Key Takeaways

• All crypto exchanges operating in Taiwan must register with the FSC under the AML Registration scheme.
• Virtual Asset Service Providers (VASPs) follow eight detailed guidelines covering white‑paper disclosure, asset segregation, and cybersecurity.
• Security tokens are restricted to licensed securities dealers; only one STO has cleared the TPEx process so far.
• Professional investors can access foreign crypto ETFs under a new five‑point framework.
• Compliance costs are rising, prompting market consolidation but boosting consumer confidence.

Since 2023 the Financial Supervisory Commission (FSC) has been shaping Taiwan’s approach to digital assets, treating cryptocurrencies as virtual commodities and imposing a strict compliance regime on exchanges. If you run a crypto exchange-or plan to launch one-in Taiwan, you need a clear roadmap of the current rules, the pending legislation, and the practical steps to stay on the right side of the regulator.

Why the FSC’s Framework Matters

The FSC is Taiwan’s top‑level financial watchdog. By classifying crypto as a virtual commodity rather than legal tender, it can apply existing AML, securities, and consumer‑protection laws while still allowing innovation. This “middle path” gives exchanges a predictable environment, but it also means they must meet a long checklist of duties that many Western jurisdictions still lack.

Core Registration Requirements

Effective July2024, every Virtual Asset Service Provider (VASP) -including cryptocurrency exchanges, custodians, and wallet providers-must complete an Anti‑Money‑Laundering Registration with the FSC before offering services in Taiwan. The process includes:

1. Submitting a detailed corporate structure and ownership chart.
2. Providing a risk‑based AML/CFT program vetted by an approved auditor.
3. Designating a compliance officer who holds a relevant certification.
4. Uploading a publicly accessible whitepaper that outlines token economics and user rights.
5. Passing a cybersecurity assessment that covers hot‑wallet controls, multi‑factor authentication, and incident‑response plans.

Both domestic and foreign exchanges face the same registration hurdle; the FSC does not differentiate based on the issuer’s nationality, only on where the service is offered.

Eight Pillars of the VASP Guidelines

In response to the FTX collapse, the FSC released a set of practical guidelines in September2023. Though not hard law, they function as industry standards. The eight pillars are:

Failure to meet any pillar can trigger fines up to NT$10million (≈ US$320k) or revocation of the registration.

Security Token Regulation - The Tight Spot

Security tokens are treated under the Securities Exchange Act. Only licensed securities dealers may issue or trade them, and the Taipei Exchange (TPEx) has been appointed to draft and enforce specific STO regulations. The barriers include:

• Mandatory prospectus filing with the FSC.
• Investor qualification checks (net worth ≥ NT$5million).
• Ongoing disclosure obligations similar to listed equities.

To date, only one security‑token offering has cleared TPEx’s vetting, illustrating how restrictive the framework remains.

Crypto ETF Access for Professional Investors

In early 2025 the FSC, together with the Securities Business Association, rolled out five key criteria that let qualified professional investors purchase foreign crypto ETFs. The criteria focus on:

• Minimum investment of NT$3million.
• Verification of investment experience (3‑year track record).
• Use of authorized custodians approved by the FSC.
• Regular reporting of holdings to the regulator.
• Risk‑disclosure acknowledgment.

This measured approach signals that Taiwan is ready to blend traditional finance products with digital assets, provided the investors are sophisticated enough to handle volatility.

Compliance Checklist for Exchanges

Below is a quick‑reference checklist that any exchange should run through before launching or renewing its FSC registration.

• FSC registration: Submit AML registration form and receive approval.
• Whitepaper posted and updated regularly.
• Separate cold‑wallets for customer assets; maintain hot‑wallet for operational flow.
• Implement AML/KYC procedures aligned with Taiwan’s Money‑Laundering Control Act.
• Appoint a certified compliance officer and document policies.
• Conduct annual independent security audit (covering both software and hardware).
• Provide quarterly AML and financial reports to the FSC.
• Establish a disaster‑recovery plan approved by the regulator.
• For any security‑token activity, obtain a TPEx licence or partner with a licensed dealer.
• If offering crypto ETFs, verify investor qualifications per the five‑point framework.

Cross‑checking this list against internal controls can save weeks of back‑and‑forth with regulators.

Impact on the Market Landscape

The regulatory push is raising operating costs-estimated compliance spend has risen from 5% to roughly 12% of an exchange’s total budget. Smaller players struggle to meet the threshold, leading to consolidation as larger, well‑capitalized platforms acquire niche services.

On the upside, consumer confidence is climbing. A 2024 survey by Taiwan’s Central Bank showed a 27% increase in user trust for exchanges that displayed FSC registration numbers on their websites.

Internationally, Taiwan’s clear “virtual commodity” stance is attracting institutional interest. Asset managers in Singapore and Japan are scouting Taiwanese‑registered exchanges as potential onboarding partners for cross‑border crypto services.

What’s Coming Next?

The FSC is drafting a standalone cryptocurrency law, expected to be announced mid‑2025. Key expected provisions include:

• Explicit definitions of “crypto‑asset,” “stablecoin,” and “NFT.”
• Mandatory licensing for any platform offering spot trading.
• Stricter penalties for AML breaches (up to NT$50million).
• Expanded consumer‑protection clauses, such as escrow‑type fund guarantees.

Exchanges should monitor the feasibility study slated for release by the end of 2024 and be ready to adjust policies within a six‑month grace period once the law is enacted.

Practical Steps for Operators Today

1. Confirm registration status: Log in to the FSC portal and verify that your AML registration is active and up‑to‑date.
2. Conduct a gap analysis against the eight VASP pillars and the compliance checklist above.
3. Engage a local law firm experienced in FSC regulations to review your whitepaper and tokenomics disclosures.
4. Upgrade your custodial architecture: adopt multi‑sig cold wallets and enforce strict segregation policies.
5. Schedule an external security audit before the next reporting deadline (typically Q2).
6. If you plan to issue security tokens, start talks with TPEx early to understand licensing timelines.
7. Set up a compliance dashboard that tracks KYC, AML transaction monitoring, and reporting metrics in real time.

Following these steps will not only keep you on the right side of the FSC but also give you a competitive edge as other operators scramble to meet the new standards.

FSC crypto regulations Taiwan are still evolving, but the core requirements are clear: register, segregate assets, publish a whitepaper, and keep AML controls tight. Staying ahead of the curve means treating compliance as a strategic advantage rather than a cost‑center.