Taiwan to Propose Law Allowing Banks to Issue Stablecoins by June 2025

Taiwan plans to propose a law by June 2025 allowing banks to issue stablecoins, enhancing virtual asset trading with TWD.

The Taiwan government plans to propose a new law for Virtual Asset Service Providers (VASPs) by June 2025. This legislation will allow banks to issue stablecoins for the first time. Stablecoins make it easier for people to first buy virtual currencies by connecting Taiwan’s official currency, the New Taiwan Dollar, to these crypto assets.

The Financial Supervisory Commission (FSC) plans to make public the first version of the VASP law in June. FSC Chairman Peng Jinlong says they want to give investors a stable and trustworthy way to trade in virtual currency. Investors will find the market better to use and invest in when stablecoins connect to an official currency like the TWD.

Digital assets called stablecoins maintain their worth by linking to stable national currencies like the US dollar or the TWD. They offer two main benefits: their primary role is to protect investments during unstable market times. People can trade their Bitcoin for stablecoins when prices swing a lot to help keep their money secure. Second, these stablecoins make buying and selling between countries quicker and cheaper than other payment methods.

Taiwan to Require FSC Approval for Stablecoins Issuers

Stablecoins let investors store their cryptocurrency safely when the market’s too unpredictable to stay in. Investors can later use their stablecoins to buy their own country’s currency or put them back into investing in digital currencies.

The popular stablecoins USDC and USDT have no official approval from current regulators. The businesses that create these coins say they store US dollar reserves to match the number of coins they produce. Moving forward, anyone who wants to make stablecoins in Taiwan will have to get the green light from the FSC. The law demands issuers to prove they are qualified and show how they handle their backing reserves.

People are wondering if stablecoins will transition from online use to being used in everyday, offline economic activities. During his discussion, bank director Zhuang Xiuyuan said that he and others would have to talk more with Taiwan’s central bank about this problem. The central bank will share control over stablecoin projects to make sure they do not harm financial stability, explained Peng Jinlong.

CBDCs act as online cash equivalents backed by the government, while stablecoins rely on and maintain value through existing national currencies. This distinction is important and will be clarified in future discussions with the central bank.

Gary Gensler, who used to lead the SEC, described stablecoins as gambling chips on a casino table. He said that stablecoins mostly flow through online financial markets without entering regular commerce. Today, experts argue about how stablecoins fit into and should be regulated in finance.