FSC Crypto Regulations in Taiwan for Exchanges: What You Need to Know in 2025

If you're running or planning to launch a cryptocurrency exchange in Taiwan, you can't afford to ignore the FSC crypto regulations. The Financial Supervisory Commission (FSC) has spent the last two years building one of Asia’s most detailed digital asset frameworks - not to shut down innovation, but to make sure it doesn’t turn into a free-for-all. Unlike countries that ban crypto outright or let it run wild, Taiwan chose a middle path: regulated openness. And if you're operating here, you need to know exactly what that means.

What the FSC Actually Regulates

The FSC doesn’t treat Bitcoin or Ethereum as money. They’re classified as "virtual commodities." That’s not just semantics - it changes everything. Because they’re not legal tender, they fall outside the scope of traditional banking laws. Instead, the FSC created a new category: Virtual Asset Service Providers (VASPs). This includes any exchange, wallet provider, or trading platform that handles crypto for others.

If you’re doing business in Taiwan - even if you’re based overseas - and you serve Taiwanese users, you’re a VASP. That means you must register with the FSC. No exceptions. No gray areas. The registration requirement became mandatory in July 2024, and the FSC has been actively cracking down on unregistered platforms ever since.

The Eight Rules Every Exchange Must Follow

In September 2023, after the FTX collapse exposed how dangerous unregulated crypto platforms could be, the FSC dropped its Guidelines for Virtual Asset Service Providers. These aren’t laws yet, but they’re treated like law in practice. Here’s what you need to get right:

• Whitepapers are mandatory. Every new token you list must come with a public, detailed whitepaper. No vague promises. No anonymous teams. Full disclosure.
• Separate customer assets. Your customers’ crypto can’t sit in the same wallets as your company’s funds. Cold storage is required for 90% of holdings. Hot wallets? Limited, monitored, and audited.
• Transparent trading. No hidden fees. No market manipulation. No front-running. All order types, pricing, and execution rules must be clear to users.
• Strong cybersecurity. You need intrusion detection, multi-signature wallets, regular penetration tests, and an incident response plan. The FSC doesn’t accept "we’ve never been hacked" as a security policy.
• Internal controls and audits. Quarterly internal audits. Annual external audits by licensed firms. Records kept for at least five years.
• Public disclosure. You must publish your registration status, risk warnings, and any material changes to your services on your website - in Chinese.
• Operational oversight. Your management team must have clean backgrounds. No history of fraud, money laundering, or financial crimes.
• Foreign operators must comply too. If your exchange is based in Singapore or the U.S. but accepts Taiwanese users, you still need to register and follow all rules.

Security Tokens Are a Different Ballgame

Not all crypto is treated the same. If a token represents ownership in a company, shares in a fund, or a claim on future profits - it’s a security token. And those? They’re locked down tight.

Only licensed securities dealers can trade them. The Taipei Exchange (TPEx) is the only approved venue. To date, only one security token has been officially issued in Taiwan. Why? Because the compliance costs are massive. You need full financial disclosures, investor accreditation checks, and ongoing reporting. Most startups can’t afford it. So while security tokens are legal, they’re practically off-limits to everyone but big institutions.

Anti-Fraud Laws Are Now Criminal

Taiwan didn’t just add rules - it added jail time. In 2024, the Legislative Yuan passed four new laws targeting crypto fraud and money laundering. Non-compliance isn’t just a fine anymore. It’s a criminal offense.

The Ministry of Justice made it clear: if you run an unregistered exchange, launder crypto, or scam users, you could face custodial sentences. Administrative penalties still apply - fines up to NT$10 million (roughly $310,000 USD) - but now, the police can arrest you. This shift sent shockwaves through the industry. Many small operators shut down. Others scrambled to get compliant.

What About Crypto ETFs?

Taiwan isn’t blocking crypto exposure - it’s controlling it. In early 2024, the FSC allowed professional investors to buy foreign crypto ETFs. That means if you’re a qualified investor with over NT$10 million in assets, you can invest in Bitcoin or Ethereum ETFs listed in the U.S. or Europe.

But retail investors? Still locked out. The FSC is watching how these ETFs perform. If they’re stable and well-managed, they might open access to the broader public by 2026. For now, it’s a test run for institutional-grade adoption.

The Industry Is Self-Policing

Surprisingly, Taiwan’s biggest exchanges didn’t fight the rules. They formed the Taiwan Virtual Asset Service Provider Association - a 24-member group of leading platforms including Bitrue, BitoPro, and Bybit’s local arm. Their goal? Work with the FSC to shape practical rules, not resist them.

This isn’t just PR. It’s survival. The association helps members share compliance tools, audit templates, and training programs. It also gives the FSC real-world feedback. The result? Regulations that actually work in practice, not just on paper.

What’s Coming Next?

The FSC is drafting a full cryptocurrency law. A feasibility study wrapped up in late 2024. The draft law is expected by mid-2025. When it passes, it will replace the current guidelines with binding legislation. That means:

• More detailed rules on token classification
• Standardized KYC requirements across all exchanges
• Clearer penalties for non-compliance
• Stronger alignment with global standards like FATF

If you’re running an exchange, you need to plan for this. Don’t wait until the law drops. Start building compliance now. The FSC won’t give you a grace period.

Why This Matters for You

Taiwan’s approach isn’t about stopping crypto. It’s about making it safe. Exchanges that follow the rules are seeing real benefits: more institutional interest, higher user trust, and better access to banking services. Some have even partnered with local banks for fiat on-ramps.

On the flip side, exchanges that ignored the rules? They’re gone. The FSC has shut down over 12 unregistered platforms since 2023. And they’re not just blocking websites - they’re working with international regulators to track down operators.

If you’re thinking about launching an exchange in Taiwan, here’s your checklist:

1. Register as a VASP with the FSC before launching
2. Implement asset segregation - cold storage for 90%+ of funds
3. Write clear whitepapers for every token you list
4. Pass a cybersecurity audit by a licensed firm
5. Train your team on AML/KYC procedures
6. Set up quarterly internal audits
7. Publicly display your registration status and risk warnings

Skip any of these, and you’re not just risking fines. You’re risking prison.

Final Thought: Compliance Is Competitive Advantage

In Taiwan, being regulated doesn’t mean you’re behind. It means you’re ahead. The market is consolidating. The unregulated are fading. The compliant are growing. If you’re serious about crypto in Asia, Taiwan isn’t a place to avoid - it’s a place to build. But only if you play by the rules.