Taiwan is targeting the second half of 2026 for the potential rollout of its first domestically issued stablecoin, as lawmakers advance legislation to regulate the digital asset sector. While the timeline is becoming clearer, critical details, including which currency the token will be pegged to, remain undecided.

According to local media reports, Financial Supervisory Commission (FSC) chair Peng Jin-long informed lawmakers that the draft Virtual Assets Service Act has passed initial cabinet reviews. The bill could complete its third and final reading in the next legislative session. Once the primary law is approved, specific rules governing stablecoins are expected to be established within six months, pointing to late 2026 as the earliest possible launch date.

Banks to Lead Initial Rollout

The proposed legislation doesn’t exclusively limit stablecoin issuance to banks, but Peng confirmed that financial institutions will spearhead the initiative in its early stages. This cautious approach reflects regulators’ desire for a controlled entry into the domestic digital token market. The FSC is working closely with Taiwan’s central bank, which has historically enforced strict controls to prevent the New Taiwan dollar from circulating outside the country.

To mitigate risks, regulators are drafting rules that will mandate full reserve backing for the stablecoin, strict segregation of client assets, and the use of domestic custody services.

The Challenge of Choosing a Peg

The central bank’s long-standing currency policy is the primary hurdle in the stablecoin’s design. A token pegged to the New Taiwan dollar would directly conflict with foreign exchange rules, as stablecoins are designed for seamless cross-border transfers—a function that could undermine policies meant to keep the local currency onshore.

Alternatively, a stablecoin backed by the US dollar would bypass the most significant regulatory challenges and align more closely with global use cases for cross-border payments and settlements. Peng stated that the final decision on the anchor currency will ultimately depend on market demand, with no firm commitment made to either option yet.

Wider Crypto Regulation and Enforcement in Focus

The push for a regulated stablecoin comes as Taiwan’s government considers broader integration of digital assets. Officials are reportedly evaluating Bitcoin as a potential strategic asset for the nation’s reserves and may explore pilot holdings using seized crypto awaiting auction.

The need for stronger oversight was highlighted by a recent major enforcement action. In August, Taiwanese prosecutors indicted 14 individuals in the nation’s largest-ever crypto money-laundering case, a NT$2.3 billion ($75 million) fraud that victimized over 1,500 people. The operation used dozens of storefronts posing as licensed crypto exchanges to funnel investor funds into overseas accounts. Prosecutors described the scheme as a “systematic fraud” that exploited regulatory blind spots and investor interest in the crypto market.