FSC exposes the key points of Stable Coin regulation, intending to open bank issuance of Stable Coin. Will investors buy it?

The Financial Supervisory Commission of Taiwan held a public hearing today, (13), to discuss the draft of the "Special Act for Virtual Asset Platform and Transaction Business (VASP)," with the most followed focus being the opening up for banks to peg new Taiwan coins or U.S. dollars and other legal tender coins for Stablecoin issuance, providing a stable bridge for virtual currency coin transactions. However, the international competitiveness of Taiwan's banking industry in issuing U.S. dollar Stablecoin remains to be observed.

( FSC frankly admitted that only three VASPs have submitted registrations. Peng Jinlong: The core has shifted from anti-money laundering to institutional management )

FSC promotes VASP special law, with Stable Coin as a key highlight

Economic Daily reported that according to the FSC's plan, the VASP special law will include seven main chapters, covering general principles, management of virtual asset service providers, VASP association regulations, stablecoin issuance and management, regulatory measures, penalties, and supplementary provisions. The regulatory focus will be on corporate organizational structure, capital requirements, personnel qualifications, financial reporting, and user protection.

One of the highlights is allowing banks to issuanceStable Coin, with the draft defining "Stable Coin" as: "virtual assets pegged to the value of a single or multiple legal tender coins to maintain value stability".

In other words, in the future, banks can issue Stable Coins linked to new Tai Coin, US Dollar, or Euro and other currencies, bringing more digital payment and cross-border transaction applications and choices to the market.

Stable Coin issuance still faces international challenges and regulatory gaps

However, whether the issuance of USD Stable Coin by Taiwanese banks can gain global market recognition is still an unknown. Currently, the mainstream USDT and USDC have long been deeply rooted in the market, with a strong network effect. Whether the new issuance of Stable Coin in Taiwan can successfully establish market trust and be adopted by investors remains to be seen.

In addition, unlike EU regulations, the current Taiwan VASP special law only allows the hooking of Stable Coins and legal tender coins, but does not include the possibility of hooking with assets such as gold, which may create regulatory loopholes in the future:

If there are businesses that link the issuance of 'similar coin' to gold, but VASP regulations cannot be enforced, these assets will still circulate in the market, creating a regulatory gray area.

( When will Taiwan's Virtual Currency Special Act regulate Stable Coin and Bitcoin ETF for individual investors? FSC: A six-month observation period )

Industry suggestions recommend that the FSC should include more 'assets' in the draft to gradually open the market in response to future market trends.

Regulatory three major points for Stablecoin, ensuring asset security

In addition, the FSC has also established three major regulatory principles for Stable Coinissuance:

Adopt a 'licensing system': issuers must meet specific qualifications, and the Stable Coin issuance project must be approved by the FSC and the central bank.

Full reserve assets: issuance people need to reserve enough reserve assets and deposit them in domestic financial institutions to ensure that holders can redeem them at any time.

Asset Isolation: The reserve assets of Stable Coins must be segregated from the issuer's own property to avoid financial risks affecting the rights and interests of holders.

VASP operators' transition period and penalties

For VASP operators, the draft regulations provide a six-month transition period, during which operators must apply for and obtain a license issued by the FSC within 15 months after the special law is implemented. In addition, even after the regulations are announced, they still need to pass three readings in the Legislative Yuan. It is expected that it will take some time before the regulations officially take effect, and the FSC considers this preparation period to be quite reasonable.

In terms of penalties, if it involves virtual asset fraud or market manipulation, the maximum sentence can be 10 years in prison, with a fine ranging from 10 million to 200 million New Taiwan Coins; while unlicensed coin traders may face a maximum of 7 years in prison, along with a fine of less than 100 million.

( exchanges and OTCs are struggling to survive! FSC to submit a special law by the end of June, unlicensed coin traders may face up to seven years in prison and a fine of up to two million)

The introduction of the VASP special law draft symbolizes a new era for Taiwan's cryptocurrency trading, especially the policy of open bank issuance of Stable Coin, which will lay a good foundation for the market. However, ensuring international competitiveness, adjusting regulatory frameworks to respond to market development, is still an important issue that regulatory authorities and the industry need to follow together in the future.

The article focuses on the FSC's regulatory focus on Stable Coin, considering opening bank issuance of Stable Coin. Will investors buy in? First appeared on ChainNews ABMedia.