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) isn't just watching-it's building a system that forces exchanges to play by strict rules or get shut down. This isn't about slowing innovation. It's about making sure people's money stays safe when they trade Bitcoin, Ethereum, or any other digital asset.

What the FSC Actually Regulates

The FSC doesn't treat cryptocurrency as money. It calls it a "virtual commodity." That distinction matters because it means exchanges aren't allowed to act like banks. They can't hold deposits, issue loans, or promise returns. But they can facilitate trading-only if they follow the rules.

All exchanges operating in Taiwan, whether based locally or overseas, must register as a Virtual Asset Service Provider (VASP). This isn't optional. Since July 2024, any exchange doing business with Taiwanese users must complete mandatory AML registration with the FSC. Failure to register means you're breaking the law-and you could face criminal charges.

The FSC also draws a line between security tokens and regular cryptocurrencies. If a digital asset qualifies as a security token, it falls under the Securities and Exchange Act. That means only licensed securities dealers can trade them. The Taipei Exchange (TPEx) is the only platform approved to handle these, and even then, only one security token has been officially issued so far. For most traders, this doesn't change much-but it shows the FSC is serious about controlling high-risk assets.

What Exchanges Must Do to Stay Legal

The FSC doesn't just say "register and go." It demands real, measurable compliance. Here's what every exchange needs to have in place:

• Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) systems: Every user must be verified. Exchanges must collect full identification, monitor transactions for suspicious patterns, and report anything unusual to authorities.
• Asset segregation: Customer funds and crypto must be kept completely separate from the exchange's own money. No mixing. No using user deposits to cover operational costs.
• Cold and hot wallet security: Most assets must be stored in offline, cold wallets. Only small amounts for daily trading can be kept online. Exchanges must prove they have encryption, multi-signature access, and regular audits of their wallet systems.
• Internal controls and audits: Exchanges need independent auditors reviewing their systems at least once a year. They must document every decision, every policy, and every security update.
• Public disclosure: Exchanges must publish clear terms of service, fee structures, and risk warnings on their websites. No hidden clauses. No vague language.
• Fair trading rules: No price manipulation. No wash trading. No favoring certain users. The FSC monitors trading data and can shut down platforms that show signs of manipulation.

These aren't suggestions. They're requirements backed by new laws passed in 2024. Violations can lead to fines, suspension of operations, or even jail time for executives.

The New Anti-Fraud Laws

In 2024, Taiwan's Legislative Yuan passed four major anti-fraud laws specifically targeting crypto. These aren't just administrative penalties-they're criminal offenses.

Now, if an exchange hides user funds, runs a Ponzi scheme, or lies about its reserves, the people behind it can be sentenced to prison. The Ministry of Justice made it clear: cryptocurrency fraud is no longer treated as a financial mistake. It's financial crime.

One example: if an exchange claims to have $100 million in reserves but only holds $10 million, that's fraud. If they suddenly disappear with user funds, that's theft. The FSC works directly with prosecutors to build criminal cases. In 2024, two local exchanges were shut down and their owners arrested under these new laws.

How Taiwan Compares to Other Countries

Taiwan isn't going full ban like China, nor is it going full free-for-all like some smaller nations. It's taking a middle path-similar to Japan and South Korea.

Like Japan, Taiwan requires registration and strict AML rules. Like South Korea, it demands real-time transaction monitoring and user ID verification. But Taiwan goes further in two key areas: criminal penalties for fraud and the push for asset segregation.

The FSC also watches global moves closely. When the U.S. approved spot Bitcoin ETFs in January 2024, Taiwan didn't rush to copy it. Instead, it waited. By late 2024, it allowed professional investors to access foreign crypto ETFs-but only after setting strict rules. You need to be a qualified investor with over NT$10 million in assets to even qualify. Retail traders are still locked out.

This isn't about holding back progress. It's about protecting ordinary people from losing everything to a scam.

Industry Response: Cooperation Over Conflict

Instead of fighting the rules, Taiwan's biggest exchanges came together. In early 2024, 24 major platforms formed the Taiwan Virtual Asset Service Provider Association. Their goal? To help shape the regulations so they actually work in practice.

This group meets monthly with FSC officials. They share technical challenges-like how to verify overseas users or handle cross-border transactions. They've helped rewrite confusing parts of the guidelines to make them clearer for operators.

It's rare to see an industry this proactive. In many countries, exchanges lobby to weaken rules. In Taiwan, they're helping build them. That’s why the FSC trusts them enough to allow them to self-report minor compliance issues without immediate penalties-as long as they fix them fast.

What’s Coming Next?

The FSC isn't done. A full cryptocurrency law is in the works. A feasibility study was completed in late 2024, and a draft law is expected by mid-2025. This law will likely:

• Formally define what counts as a "virtual asset" under Taiwanese law
• Establish a licensing system for exchanges (not just registration)
• Require insurance for customer assets
• Possibly allow retail investors to access crypto ETFs, but only through approved platforms

The FSC is also looking at how to regulate decentralized finance (DeFi) platforms and NFT marketplaces. Right now, those are in a gray zone. But that won't last. If they start handling money or trading assets, they'll be pulled into the VASP framework.

What This Means for You

If you're a trader in Taiwan: you're safer now. Your funds are less likely to vanish because exchanges have to prove they're keeping them secure. You have legal recourse if something goes wrong.

If you're an exchange operator: the cost of compliance is high. You need lawyers, auditors, cybersecurity teams, and compliance officers. Many small exchanges have already closed. Only those with real funding and serious infrastructure are surviving.

If you're an investor from outside Taiwan: you can still trade on Taiwanese exchanges-but only if they're FSC-registered. Check their website. Look for the FSC registration number. If it's not there, walk away.

The message from the FSC is clear: you can operate here. But you have to do it right. No shortcuts. No excuses. No exceptions.

How to Check if an Exchange Is Legit

Here's how to verify a platform before you deposit any money:

1. Go to the FSC's official website and search their VASP registry. All registered exchanges are listed there.
2. Look for the registration number on the exchange's website-usually in the footer or "About" section.
3. Check if they publish their AML policies and wallet security details. If they don't, they're hiding something.
4. Search for news about the exchange. If there are reports of delays in withdrawals or user complaints, avoid it.
5. Don't trust social media influencers. If someone pushes an exchange without mentioning FSC registration, they're not being honest.

The FSC doesn't endorse any exchange. But it does verify who's playing by the rules. Use that verification as your first line of defense.