Taiwan virtual asset rules could take effect in Q1 2027: FSC head

Taipei, Sept. 2 (CNA) Taiwan could roll out regulations governing virtual assets and stablecoins as early as the first quarter of 2027, Financial Supervisory Commission (FSC) head Peng Jin-lung (彭金隆) said Wednesday.

In his opening remarks on the first day of the Asia FinTech Alliance (AFA) Summit in Taipei, Peng said global discussion surrounding virtual assets and stablecoins have shifted from "whether they should be developed to how they can develop soundly."

Stablecoins are digital tokens designed to maintain a stable value, typically by being pegged to a fiat currency such as the U.S. dollar.

Taiwan's first legal framework governing stablecoin issuance was established earlier this year, when the Legislative Yuan passed the Virtual Asset Services Act on June 30.

Peng said nine sets of supplementary regulations under the Virtual Asset Services Act were "being actively drafted," including rules on stablecoins.

Those regulations could be "formally announced and implemented as early as the first quarter of next year," Peng said, adding that once the new law takes effect, Taiwan's virtual asset and stablecoin market will "take on a completely new look."

Taiwan's stablecoin market currently consists of foreign-issued stablecoins such as USDT and USDC being traded and used in Taiwan.

What Taiwan has lacked is a fully implemented domestic regulatory framework for locally issued stablecoins that began with the new Virtual Asset Services Act and will be supported by supplementary regulations.

These actions are needed, Peng said, because the integration of artificial intelligence (AI) and finance had entered a stage of "full practical application."

He pledged that the FSC would continue to promote the use of technology in fraud prevention and financial digital transitions while managing related risks.

Meanwhile, Taiwan FinTech Association Chairwoman Wang Li-ling (王儷玲) said stablecoins could help money move more efficiently alongside goods and information in global supply chains.

For multinational companies, stablecoins could improve liquidity management, while exporters and importers could benefit from shorter settlement cycles, she said.

"The importance of the stablecoin actually is not about the coin, it's about being stable," Wang said, adding that stability depended on trust in reserves, redemption, technology and regulation.

"Cross-border innovation requires cross-border governance," she added.

AFA Chairwoman Jaclyn Tsai (蔡玉玲) said the alliance, founded in 2023, now connects fintech associations from 16 Asian economies, with one association representing each economy.

By bringing members together through the alliance and events such as the summit, participants operating under different currencies and regulatory systems can "share what works and what failed, and build solutions together," she said.

The AFA Summit, now in its second edition, concludes Thursday, with regulators and financial industry leaders from across Asia discussing blockchain, global supply chains, stablecoin policy, cross-border payments and AI-driven trade finance.

Though Wang cited a possible use for stablecoins and the need for cross-border regulation, critics of digital assets abound, questioning their function and the lack of transparency of companies that issue the digital asset.

Ben McKenzie, co-author of the book "Easy Money," testified before a U.S. Senate committee in late July on how digital assets such as Tether have been abused by criminals.

"Much has been written about how Tether is used by organized crime all over the world," he said.

"In a U.N. (United Nations) report from 2024, it notes that Tether is the 'preferred choice' for crypto money launderers in Southeast Asia."

He added that Tethers have been used for international drug cartels and terrorist organizations and also used for sanctions and tax evasion.

None of the speakers Wednesday morning directly addressed those issues, though Peng did say detailed regulations were forthcoming.