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 tightening the rules-and it’s not slowing down. This isn’t about blocking innovation. It’s about making sure exchanges don’t become playgrounds for fraud, money laundering, or investor traps. By late 2024, the FSC had turned its guidelines into hard expectations. And by mid-2025, new laws are expected to make compliance non-negotiable.

What the FSC Actually Regulates

The FSC doesn’t treat Bitcoin or Ethereum as money. They’re classified as virtual commodities. That distinction matters. It means you can’t use them to pay for coffee, but you can trade them-so long as you follow the rules. The FSC draws a clear line: if a digital asset acts like a stock (like a token that promises profit from a project), it’s a security. Those fall under the Securities and Exchange Act. Everything else? Covered by the new Virtual Asset Service Provider (VASP) rules.

Registration Is Mandatory-No Exceptions

Starting in July 2024, every exchange operating in Taiwan, whether based locally or overseas, must register with the FSC. This isn’t a suggestion. It’s a legal requirement. If you’re processing trades, holding wallets, or offering custody services to Taiwanese users, you’re a VASP-and you need to be registered. The FSC doesn’t care if your servers are in Singapore or your team is in Canada. If Taiwanese customers are using your platform, you’re under their jurisdiction.

Unregistered exchanges have been shut down. Customers have lost access to funds. The FSC has made it clear: no registration, no operation. The registration process includes submitting detailed documentation on ownership, internal controls, AML procedures, and cybersecurity measures. There’s no fast track. No gray area.

Anti-Money Laundering Rules Are Strict-and Enforced

The FSC’s AML rules are modeled after global standards but with local teeth. Every exchange must implement Know Your Customer (KYC) checks that verify users’ identities, addresses, and sources of funds. That means collecting government-issued IDs, proof of residence, and sometimes even bank statements. Automated systems must flag suspicious activity-like rapid deposits followed by withdrawals to unrelated wallets-and report it to authorities.

Penalties for failing AML checks are severe. Fines can reach millions of New Taiwan Dollars. But worse than fines are the criminal charges. Under new laws passed in 2024, individuals found knowingly facilitating money laundering through crypto can face jail time. The Ministry of Justice has made it clear: crypto crime is no longer treated as a technical violation. It’s financial crime.

Asset Segregation: Your Customers’ Money Isn’t Yours

One of the biggest lessons from the FTX collapse? Customer funds shouldn’t be mixed with company funds. The FSC now requires all exchanges to keep customer assets completely separate from their own. That means using cold storage wallets for the majority of holdings, with clear accounting records showing which coins belong to whom.

Exchanges must also prove they can’t access customer funds for operational expenses or investment purposes. Auditors are now checking wallet addresses, transaction logs, and internal access controls. If you can’t show that your customers’ Bitcoin is locked in a secure, offline vault-and that your team can’t move it without multi-signature approval-you won’t pass compliance.

Transparency and Disclosure Are Required

You can’t just list a new token and hope users figure it out. The FSC requires exchanges to publish detailed whitepapers for every virtual asset they list. These must include: the project’s purpose, team background, tokenomics, risks, and how the asset is used. No vague promises. No hype. Just facts.

Exchanges must also publicly disclose their fee structure, trading volumes, and any conflicts of interest. If your platform is running its own trading bots or front-running orders, you’re breaking the rules. The FSC has been monitoring order books and matching engines. They’ve already taken action against platforms that manipulated trading activity.

Security Standards Are Non-Negotiable

The FSC doesn’t just want you to say you’re secure-they want proof. Exchanges must meet specific cybersecurity standards, including:

• Multi-signature wallet systems for withdrawals
• Regular penetration testing by certified third parties
• 24/7 monitoring for hacking attempts
• Encryption of all user data
• Employee access controls with audit trails

In 2024, a major Taiwanese exchange lost over $20 million in a breach. The FSC didn’t just fine them-they revoked their license. The message was clear: security isn’t an IT issue. It’s a compliance requirement.

Security Tokens? Only for Licensed Dealers

If you’re thinking about launching a token that promises dividends or equity, think again. Security tokens are treated like stocks. Only licensed securities dealers can trade them. The Taipei Exchange (TPEx) is the only approved venue, and even then, only one STO has been approved since the rules came into effect. The barriers are high: legal counsel, audit reports, prospectus filings, and ongoing reporting. For most startups, it’s not worth the cost.

Crypto ETFs Are Here-But Only for Pros

The FSC has allowed professional investors to access foreign crypto ETFs. That means accredited investors-those with over NT$10 million in assets or five years of trading experience-can now buy Bitcoin or Ethereum ETFs listed in the U.S. or Europe through Taiwanese brokers. But retail investors? Still blocked. The FSC believes retail traders need more protection before they can access these products.

What’s Coming in 2025

The FSC is drafting a full cryptocurrency law. A feasibility report was completed in late 2024, and a draft law is expected by June or July 2025. This will likely codify all current guidelines into binding legislation. That means:

• More detailed rules on wallet management
• Stricter reporting deadlines
• Potential limits on leverage trading
• Expanded oversight of decentralized finance (DeFi) platforms that interact with Taiwanese users

Industry groups like the Taiwan Virtual Asset Service Provider Association are already working with regulators to shape the law. But don’t expect leniency. The FSC’s goal isn’t to stifle growth-it’s to make sure growth is safe, transparent, and sustainable.

Who’s Affected the Most?

Small exchanges with limited resources are feeling the pressure. Compliance costs-legal fees, audits, security upgrades, staffing-can run over NT$5 million annually. Many smaller platforms have shut down or moved operations overseas. Meanwhile, larger exchanges like Bitrue, Binance (with a local compliance team), and local players like Kuna and OSL have invested heavily in compliance and are now operating openly.

The result? A cleaner, more trustworthy market. Customer confidence is rising. Institutional interest is growing. Taiwan is becoming a rare example in Asia of a jurisdiction that’s regulating crypto without banning it.

What You Should Do Now

If you’re an exchange operator:

1. Check if you’re registered with the FSC. If not, start the process immediately.
2. Review your KYC and AML systems. Are they real-time? Are they auditable?
3. Separate customer and company wallets. Use cold storage. Document everything.
4. Publish whitepapers for every listed asset. No exceptions.
5. Hire a compliance officer or consultant familiar with FSC requirements.
6. Prepare for the new law in 2025. Don’t wait until it’s passed.

If you’re a user:

• Only use exchanges that display their FSC registration number on their website.
• Don’t trust platforms that don’t show clear fee structures or asset listings.
• Use two-factor authentication and never leave large amounts on exchanges.

Frequently Asked Questions