Taiwan’s Financial Supervisory Commission (FSC) has unveiled plans to allow banks to issue stablecoins as part of a comprehensive regulatory framework for virtual asset service providers (VASPs).
Local media reported that the draft bill is expected to be passed in June and will establish stablecoins to act as a bridge to digital currencies between New Taiwan Dollar (TWD).
The move is part of Taiwan’s sustained effort to integrate digital assets within the traditional banking system.
Dual benefits
Kung Chinlung, FSC chairperson, highlighted the importance of stablecoins for facilitating seamless virtual asset transaction. These digital assets are typically tied to fiat currencies such as the US dollar and TWD. Their purpose is to bring stability to an extremely volatile market.
The regulator further stated that stablecoins will allow investors a safe entry point into Taiwan’s burgeoning digital asset market.
Stablecoins have two benefits. They protect against volatility in the market and they enable fast, cheap cross-border transfers. Stablecoins are often used by investors to temporarily stabilize volatile crypto assets before returning to the market.
Banking Bureau Director Chuang Hsiu-yuan noted that existing stablecoins operate without regulatory oversight and rely on issuers’ claims of fiat reserve backing. According to the proposed regulation, stablecoins in Taiwan will need FSC approval. Issuers and reserves managers are also subjected to stringent requirements.
Stablecoins and CBDCs are different.
The FSC emphasized that stablecoin development would involve close coordination with Taiwan’s central bank to address issues related to monetary policy and financial stability.
Central bank digital currency (CBDC), which is a digital version of legal tender backed by the state, are different from stablecoins. In order to prevent confusion, FSC will clearly define the roles played by stablecoins as well as CBDCs under its regulatory framework.
Taiwan’s decision aligns with international efforts to regulate stablecoins and ensure their integration into financial systems. Stablecoins have a primary role in digital ecosystems but are also increasingly seen as an innovation tool within mainstream finance.
Postings in: Taiwan, Banking Featured Legislation Regulation Stablecoins The Author 
Assad Jafri
AJ has been a journalist for more than a decade, and he’s developed his expertise in many countries. He specializes in financial reporting and now concentrates on cryptocurrency.
Email: @Saajthebard Editor
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