TLDR
- Taiwan’s first regulated stablecoin is expected to launch in the second half of 2026.
- The Financial Supervisory Commission has not yet decided whether the stablecoin will be tied to the Taiwan or U.S. dollar.
- The draft Virtual Asset Service Act has passed initial cabinet review and may reach a final legislative reading in the next session.
- Only financial institutions will lead the initial issuance phase, as agreed by the FSC and Taiwan’s central bank.
- The regulatory framework will require full reserve backing, domestic custody, and strict segregation of user assets.
Taiwan’s Financial Supervisory Commission (FSC) has confirmed plans for the island’s first regulated stablecoin launch by late 2026. The commission is drafting rules that will allow financial institutions to issue the token under new legislation. However, regulators have yet to decide whether it will be backed by the Taiwan dollar or the U.S. dollar.
Taiwan Currency Backing Decision Still Pending
The FSC stated the currency choice remains under review and depends on future market requirements and regulatory assessments. Chairperson Peng Jin-long told lawmakers, “The stablecoin could be tied to either the U.S. dollar or Taiwan dollar.” He added that the decision would come after evaluating demand and regulatory implications.
Taiwan law currently restricts the use of the local currency outside its borders, limiting offshore trading. A Taiwan dollar-backed stablecoin could directly confront those controls and increase compliance risks. A U.S. dollar peg may avoid that by aligning with existing global digital asset norms.
The final decision will shape how the stablecoin functions within Taiwan’s monetary system. It could serve as a simple payment method or a tool that tests currency boundaries. Authorities aim to balance financial innovation with currency management.
Regulation Draft Progresses Toward Final Review
The FSC revealed that the draft Virtual Asset Service Act has passed its initial cabinet review. Peng said it may complete its third reading in the legislature in the next session. Stablecoin-specific rules would then follow within six months. “The framework will emphasize asset segregation and full reserve backing,” Peng stated during the briefing.
He confirmed that only domestic custody will be permitted under the draft rules. These measures intend to reduce risk and maintain control over token flows. The stablecoin legislation does not limit issuers to traditional banks. However, Peng confirmed that the FSC and central bank want financial institutions to lead the first stage.
They believe licensed institutions are better prepared for early compliance and oversight. Authorities will likely require strict operational standards for issuers. That includes maintaining reserve assets equivalent to the stablecoin’s circulation value. Segregation of funds will also be mandatory to protect user deposits.
Cross-Border Utility Raises Currency Control Concerns
The central bank enforces strict laws that prevent offshore use of the Taiwan dollar. This policy has existed for decades and remains tightly regulated. Any digital asset using the local currency must respect those restrictions. Peng acknowledged that stablecoins naturally support cross-border payments. This feature could conflict with the island’s currency laws if not properly managed.
A Taiwan dollar-backed token may trigger regulatory issues unless limited to domestic use. A U.S. dollar-based coin would not raise those concerns. It would operate under existing cross-border transaction frameworks with fewer restrictions. This option could appeal more to institutions seeking lower regulatory friction.
Regulators have not shared a target date for announcing the currency decision. However, the launch window depends on settling that question by mid-2026. The FSC intends to finalize operational guidelines once the currency is confirmed. Peng concluded that demand from financial institutions would guide the direction of the stablecoin. He said the FSC will continue discussions with the central bank in the coming months. The earliest launch window remains the second half of 2026.
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