Stablecoins Backed by Taiwan Dollar? Here’s What You Need to Know

• Taiwan’s FSC proposes stablecoins tied to the New Taiwan Dollar to bridge fiat and crypto securely.
• New rules require local stablecoins to gain FSC approval and meet strict financial standards.
• Taiwan’s pilot program in 2025 will let banks offer crypto custody services, boosting trust in digital assets.

Taiwan is now looking to take the bull by its horns and regulate its cryptocurrency market. The Financial Supervisory Commission (FSC) has laid down new measures for virtual asset service providers (VASPs). The following are the proposed rules that are aimed at enhancing safety and openness within the digital asset sector. One important feature is the ability of banks to create their own stablecoins.

Stablecoins Pegged to NTD

Stablecoins to be used in the market of Taiwan shall be linked to New Taiwan Dollar (NTD). This is different from most global cryptocurrency which are assets backed by the US dollar. The FSC is convinced that this will enhance the confidence and develop a secure passage between the traditional and the digital currency. Taiwan’s central bank will also oversee those cryptocurrency issued by banks.

The central bank has complained about current stablecoins such as Tether and USD Coin. Officials have noted that such coins are usually marketed with the claim they are backed by the U.S dollar assets and yet this has not been validated. Taiwan’s new framework will force all stablecoins issued within the region to get approval from the FSC before listing.

It also require very stringent conditions to be met before they are issued into the market. Some of them are proving their financial strength and bringing into light the compliance with the set rules and regulations. The FSC wants to make sure that these stablecoins are not a threat to users and to enhance the confidence in the market.

Challenges with Stablecoins

Despite this, stablecoins are still not without problems when it comes to their use in the modern world. The central bank mentions aspects such as financial system stability and monetary policy. These issues have to be addressed prior to coins being able to effectively participate in retail transactions in Taiwan.

As of January 2025, Taiwan established the VASP Registration Regulations. These rules apply to crypto exchange facilities, trading venues and service providers including custodians. In this regard, VASPs are to observe the AML measures when operating. It also requires them to submit annual risk assessments to ensure that they are still compliant.

A pilot program is also being planned for the early 2025. This program will enable banks to provide custody services of cryptocurrency. It is in line with Taiwan’s plans aimed at enhancing the country’s financial services and adopting digital assets.

The announcement of stablecoin initiative in Taiwan can be seen as positive move towards the regulating the crypto market. It seems that the FSC wants to guarantee stability and trust by connecting stablecoins to the NTD. This also improves Taiwan’s stance in the worldwide digital asset market. While the country slowly introduces new technologies and derivatives, it is stone-setting the future of the cryptocurrency industry.