Financial Supervisory Commission (FSC): The primary financial regulator in Taiwan responsible for overseeing financial institutions and has extended its oversight to VASPs regarding AML/CTF.

Regulations Governing Anti-Money Laundering and Countering Terrorism Financing for Virtual Asset Service Providers (虛擬通貨平台及交易業務事業防制洗錢及打擊資恐辦法)

Issued by the FSC, effective July 1, 2021.

URL (FSC Announcement): https://www.fsc.gov.tw/ch/home.jsp?id=96&aplistdnid=0&dfile=list&qnode=14810 (Official Chinese text. English translations are often unofficial but widely available via legal firms).

These regulations require VASPs to implement robust internal control systems for AML/CTF, report suspicious transactions, and conduct due diligence.

Current State: There is no specific, dedicated "digital asset custody license" in Taiwan. However, engaging in "custody or administration of virtual assets or instruments enabling control over virtual assets" is defined as a Virtual Asset Service Provider (VASP) activity under Article 2, Paragraph 4 of the VASP AML Regulations.

Therefore, any entity providing custody services is considered a VASP and must comply with the FSC's VASP AML Regulations, including registration with the FSC, establishing internal control systems, and adhering to AML/CTF obligations. This is a registration and compliance requirement rather than a comprehensive licensing regime for prudential supervision of custody specifically.

Reference: VASP AML Regulations, Article 2, Paragraph 4.

Segregation of Client Assets Rules:

Current State: The VASP AML Regulations (Article 11) generally require VASPs to establish internal control and audit systems, including "measures for safeguarding virtual assets." While it does not explicitly mandate precise "on-chain segregation" to unique addresses per client or legal entity, it implicitly requires systems that ensure the safety and proper management of client assets. Best practices in the industry, even without explicit legal mandate, typically involve robust measures to distinguish client assets from proprietary assets.

Reference: VASP AML Regulations, Article 11.

Current State: There are no explicit regulatory mandates for VASPs to carry specific insurance or bonding for virtual asset custody in the current VASP AML Regulations. This is an area expected to be addressed in future comprehensive legislation.

Many reputable VASPs may acquire insurance as part of their risk management, but it's not a regulatory requirement at present.

Current State: There is no specific legal definition of a "qualified custodian" for digital assets in Taiwan's existing regulations, similar to definitions found in traditional securities law (e.g., in the U.S.). Any entity performing custody as a VASP must comply with the VASP AML Regulations. The forthcoming comprehensive legislation is expected to address and potentially define such roles more clearly.

Comprehensive VASP Special Law: The FSC has publicly announced its intention to establish a dedicated and comprehensive regulatory framework for virtual assets, moving beyond just AML/CTF.

In September 2023, the FSC outlined its plans for a new "special law" for virtual assets, which will cover aspects such as:

Business rules: For token issuance and trading.

Investor protection: Including segregation of client assets, insurance/compensation mechanisms.

Custody rules: Likely to be more detailed and specific regarding security, operational resilience, and potentially the definition of qualified custodians.

The FSC indicated that it plans to complete a draft of this special law in 2024. This new law is expected to significantly deepen the regulatory oversight of custody services, bringing them more in line with traditional financial custody requirements.

FSC News Release (September 2023 - Chinese): https://www.fsc.gov.tw/ch/home.jsp?id=96&aplistdnid=0&dfile=list&qnode=14810&args=AAABBBCAAAP_10&mode=&sname=&tsearch=&attrs= (Look for news releases around September 2023 regarding virtual asset supervision).

Money Laundering Control Act (MLCA): This act provides the overarching legal framework for AML/CFT in Taiwan. It mandates financial institutions and designated non-financial businesses and professions (DNFBPs), which now include VASPs, to implement robust AML/CFT measures.

Legal Reference: Money Laundering Control Act (洗錢防制法). Available on the Laws and Regulations Database of the Republic of China (Taiwan): https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?PCode=G0380088

FSC Regulations for VASPs: In April 2021, the FSC designated VASPs as reporting entities under the MLCA and issued the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers (虛擬資產服務提供者洗錢防制及打擊資恐辦法). These regulations explicitly require VASPs to implement measures for identifying and reporting suspicious transactions, conducting customer due diligence (CDD), and complying with sanctions.

Customer Due Diligence (CDD): Implementing risk-based CDD measures, including identifying beneficial owners.

Sanctions Screening: Screening customers and transactions against relevant sanctions lists.

Reporting: Reporting suspicious transactions (STRs) to the Anti-Money Laundering Office (AMLO) under the Ministry of Justice Investigation Bureau (MJIB).

Record Keeping: Maintaining records of customer identification and transactions.

Internal Controls: Establishing robust internal control systems and compliance programs.

Legal Reference: Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Virtual Asset Service Providers (虛擬資產服務提供者洗錢防制及打擊資恐辦法). Available on the FSC website (Chinese only, search by title): https://www.fsc.gov.tw/ (Navigate to "Laws and Regulations" -> "金融法規" -> "綜合類")

Global Financial Interconnectivity: Taiwanese VASPs engaging in transactions with entities or individuals in jurisdictions that do enforce these sanctions (e.g., US, EU member states) must comply to avoid being cut off from global financial networks, losing correspondent banking relationships, or facing secondary sanctions.

FATF Standards: The FATF recommendations, which Taiwan adheres to, explicitly require countries to implement targeted financial sanctions related to terrorism and proliferation financing, based on UN Security Council resolutions.

Risk Management: Failing to screen against these internationally recognized sanctions lists poses significant reputational, operational, and legal risks for VASPs.

OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control):

Any Taiwanese VASP handling transactions involving USD, US persons, or entities subject to US jurisdiction must comply with OFAC sanctions. This includes screening against the Specially Designated Nationals and Blocked Persons (SDN) List and other OFAC sanctions lists.

Reference: OFAC Sanctions List Search: https://sanctionssearch.ofac.treas.gov/

Taiwanese VASPs dealing with EU persons or entities, or operating within the EU's sphere of influence, must comply with EU restrictive measures. The EU maintains various sanctions lists.

Reference: European Union Sanctions Map: https://www.sanctionsmap.eu/

Although Taiwan is not a UN member, its MLCA mandates measures against individuals and entities designated by the UN Security Council for terrorism and proliferation financing. This is typically implemented through domestic lists.

Reference: UN Security Council Consolidated List: https://www.un.org/securitycouncil/content/un-sc-consolidated-list

Screen Customers (KYC): Conduct comprehensive Know Your Customer (KYC) procedures, including screening all new and existing customers against relevant sanctions lists (Taiwanese domestic lists, OFAC, EU, UN). This includes individuals, legal entities, and their beneficial owners.

Screen Transactions (KYT): Implement Know Your Transaction (KYT) measures to monitor crypto transactions for red flags indicative of sanctions evasion or illicit activity. This involves real-time or near-real-time screening of transaction parties and associated wallets.

Ongoing Monitoring: Continuously monitor customers and transactions for changes in risk profiles and new sanctions designations.

Hit Resolution: Establish clear procedures for handling potential sanctions "hits," including verification, freezing of assets (if required by law or international obligation), and reporting to authorities.

High-Risk Jurisdictions: VASPs are expected to apply enhanced due diligence (EDD) to transactions involving high-risk jurisdictions, as identified by the FATF (e.g., those on the FATF "grey list" or "black list") or other international bodies.

Reference: FATF High-Risk Jurisdictions: https://www.fatf-gafi.org/countries/#high-risk-jurisdictions

Sanctioned Jurisdictions: Transactions involving countries under comprehensive sanctions (e.g., Iran, North Korea, certain regions) by OFAC, EU, or UN regimes would be prohibited or severely restricted based on the VASP's international compliance obligations.

Administrative Fines: The FSC can impose substantial administrative fines on VASPs that fail to implement proper AML/CFT and sanctions compliance measures.

Rectification Orders: The FSC can order VASPs to rectify non-compliant practices within a specified period.

Suspension or Revocation of Business: For serious or repeated violations, the FSC may suspend or even revoke a VASP's business registration or license.

Criminal Penalties: Individuals responsible for severe AML/CFT violations, such as complicity in money laundering or terrorist financing, can face imprisonment and criminal fines under the MLCA and other relevant criminal statutes.

Reference: Money Laundering Control Act (洗錢防制法) - Articles 10-16 outline penalties for various offenses.

Designated Individuals and Entities: The Ministry of Justice Investigation Bureau (MJIB) is responsible for compiling and publishing lists of individuals and entities designated as terrorists or proliferators of weapons of mass destruction, based on UN Security Council resolutions and domestic investigations. Financial institutions and VASPs are required to screen against these lists and freeze funds or assets of designated persons.

These lists are typically published and updated on the MJIB website. While a direct English link to a consolidated list is not always stable, VASPs must access and utilize these official publications.

Reference: Ministry of Justice Investigation Bureau (MJIB) website: https://www.mjib.gov.tw/ (Look for sections related to "防制洗錢" or "指定對象").

Partial and Evolving: Taiwan has not issued a blanket ban, nor does it have a comprehensive, dedicated crypto-specific licensing regime for all aspects of virtual asset operations yet. The current regulation primarily treats VASPs as financial institutions for AML/CTF purposes. However, the Financial Supervisory Commission (FSC) has been actively developing a more comprehensive framework, aiming to introduce a dedicated Virtual Asset Management Act.

Anti-Money Laundering (AML) & Counter-Terrorism Financing (CTF): This is the foundation of current regulation.

Investor Protection: The FSC has increasingly emphasized safeguarding investors, especially concerning operational stability, segregation of client assets, and information security for platforms.

Financial Stability: Monitoring the potential impact of virtual assets on the broader financial system.

Self-Regulation: Encouraging VASPs to form self-regulatory organizations to set industry standards.

Role: The primary regulatory authority for virtual assets in Taiwan. It formulates policies, supervises financial markets, and is responsible for AML/CTF regulations applicable to VASPs. The FSC is leading the drafting of the future comprehensive Virtual Asset Management Act.

Role: Responsible for the overall legal framework concerning anti-money laundering and terrorism financing, including the Money Laundering Control Act, which forms the basis for VASP AML regulations.

Role: Monitors the potential impact of virtual assets, especially stablecoins, on financial stability and monetary policy. While not directly regulating VASPs, it observes the market and contributes to inter-agency discussions.

Role: A self-regulatory organization (SRO) officially established in 2024, promoted by the FSC. Its purpose is to assist in drafting industry codes of conduct, establishing standards for market practices, information security, investor protection, and promoting industry self-discipline.

Money Laundering Control Act (洗錢防制法)

Date: First enacted in 1996, significantly amended multiple times, with relevant amendments for VASPs effective around November 2018.

URL (Taiwan Laws and Regulations Database - Chinese): https://law.moj.gov.tw/LawClass/LawAll.aspx?PCode=A0030043

Significance: This act provides the legal basis for AML/CTF requirements in Taiwan and broadly defines the scope for financial institutions, which was later extended to virtual asset service providers.

Date: Promulgated by the FSC on April 7, 2021, effective July 1, 2021.

Significance: This is the core current regulation specifically for virtual asset service providers (VASPs). It mandates that VASPs must:

Establish internal control systems for AML/CTF.

Implement Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures.

Report suspicious transactions to the Anti-Money Laundering Office (AMLO) under the Ministry of Justice.

Keep transaction records for a specified period.

Comply with sanctions against designated individuals or entities.

Register with the FSC: VASPs are required to submit an AML Statement of Compliance to the FSC.

Upcoming: Virtual Asset Management Act (虛擬資產管理條例) (Draft)

Date: The FSC announced its intent to draft this dedicated act in September 2023, with a goal to release a draft for public consultation in Q3 2024.

Significance: This proposed act aims to be a comprehensive regulatory framework, moving beyond just AML. It is expected to cover:

Licensing System: A formal licensing regime for VASPs.

Protection of Client Assets: Requirements for the segregation of client funds and assets.

Information Security: Standards for platform security and data protection.

Listing/Delisting Rules: Guidelines for virtual asset offerings.

Advertising and Marketing: Rules for promotions.

Operational Requirements: Enhanced scrutiny of VASP operations and governance.

Penalties: Clear penalties for non-compliance.

Legal, but Regulated for AML: Crypto trading and the operation of virtual asset exchanges (VASPs) are not banned in Taiwan. However, they are currently regulated primarily under the AML/CTF framework as described above.

Mandatory AML Compliance & Registration: All VASPs operating in Taiwan, whether local or foreign, are required to:

Comply with AML/CTF regulations: Implement robust KYC, CDD, transaction monitoring, and suspicious activity reporting.

Register with the FSC: Submit an AML Statement of Compliance to the FSC.

No Dedicated Operating License (Yet): As of early 2024, there isn't a specific "crypto exchange license" similar to a securities broker license. The AML registration is currently the main regulatory gateway. However, this will change with the proposed Virtual Asset Management Act, which will introduce a formal licensing regime.

FSC's Oversight and Warnings: The FSC frequently reminds the public of the risks associated with virtual asset trading (e.g., price volatility, cybersecurity risks, fraud) and emphasizes that VASPs are currently not regulated as traditional financial institutions. They are pushing for enhanced self-regulation through the TVASPA to bridge the gap until the comprehensive act is in place.

Focus on Local Operations: The FSC has particularly focused on ensuring that any VASP offering services to Taiwanese citizens adheres to the local AML regulations, regardless of where the VASP is domiciled.

The Taiwan Financial Supervisory Commission (FSC) has updated its regulatory framework for virtual assets, aligning with international AML/CFT standards to enhance the integrity of the financial system. Taiwan.gov.tw - Government Portal of the Republic of China (Taiwan)

Licensing requirements have been tightened, mandating Virtual Asset Service Providers (VASPs) to register and comply with stringent Know Your Customer (KYC) procedures. Understanding the Importance of AML and Compliance in Taiwan

Enforcement actions include periodic audits and potential fines for non-compliance, emphasizing the government's commitment to combating illicit financial activities. Taiwan - Cryptoassets - Law Over Borders - The Global Legal Post

Tax treatment of virtual asset transactions is clarified, with provisions for capital gains tax applicable to certain transactions. Blockchain & Cryptocurrency Laws & Regulations 2026 | Taiwan

Key gaps and risks identified include the need for clearer guidance on cross-border virtual asset transfers and ongoing monitoring of emerging technologies. Taiwan Accelerates AML Crypto Regulations Until... - Altcoin Observer

The FSC has established a comprehensive regulatory framework for virtual assets, encompassing licensing, AML/CFT obligations, and enforcement mechanisms. Taiwan.gov.tw - Government Portal of the Republic of China (Taiwan)

This framework is designed to ensure that virtual asset service providers operate within a secure and transparent environment, safeguarding investors and maintaining market stability. International AML Compliance through FATF Recommendations

Virtual Asset Service Providers (VASPs) must obtain a license from the FSC to engage in activities such as exchange, wallet services, and custodial services. Taiwan - AML KYC Regulations

The licensing process involves thorough due diligence checks on the applicant's identity, ownership structure, and operational plans. Taiwan VASP AML Registration Regime | Crypto Law

All licensed VASPs are required to implement robust Know Your Customer (KYC) procedures, including identity verification and ongoing monitoring of customer transactions. Understanding the Importance of AML and Compliance in Taiwan

Enhanced Due Diligence (EDD) measures are mandated for high-risk customers, such as politically exposed persons (PEPs). An Insight Into Taiwan’s Amended Money Laundering... - Conventus Law

The FSC retains the authority to impose fines and suspend or revoke licenses of VASPs found in violation of AML/CFT regulations. Taiwan Accelerates AML Crypto Regulations Until... - Altcoin Observer

Regular inspections and audits are conducted to ensure compliance with the regulatory framework, with reports submitted to relevant authorities. Taiwan.gov.tw - Government Portal of the Republic of China (Taiwan)

Virtual asset transactions are subject to capital gains tax based on the difference between the acquisition and disposal values. Blockchain & Cryptocurrency Laws & Regulations 2026 | Taiwan

Taxpayers must maintain accurate records of all virtual asset transactions for tax reporting purposes, with penalties applicable for non-compliance. Taiwan.gov.tw - Government Portal of the Republic of China (Taiwan)

A notable gap is the lack of clear guidance on cross-border virtual asset transfers, potentially leading to regulatory arbitrage. Crypto Regulation in taiwan

Emerging technologies such as decentralized finance (DeFi) platforms pose challenges for traditional AML/CFT controls, necessitating adaptive regulatory approaches. [ARCHIVE Taiwan — Anti-Money Laundering Laws and Regulations...](https://iclg.com/practice-areas/anti-money-laundering-laws-and-regulations/taiwan/)

Taiwan.gov.tw - Government Portal of the Republic of China (Taiwan)

Understanding the Importance of AML and Compliance in Taiwan

Taiwan - Cryptoassets - Law Over Borders - The Global Legal Post

Blockchain & Cryptocurrency Laws & Regulations 2026 | Taiwan

Taiwan Accelerates AML Crypto Regulations Until... - Altcoin Observer

International AML Compliance through FATF Recommendations

Taiwan VASP AML Registration Regime | Crypto Law

An Insight Into Taiwan’s Amended Money Laundering... - Conventus Law