Taiwan to Unveil Draft Bill Allowing Banks to Issue Stablecoins

Joint Management of Stablecoins

The Taiwanese Financial Supervisory Commission (FSC) is set to unveil a draft bill for virtual asset service providers (VASPs) in June. According to a report, a key highlight of the draft bill is a proposal to allow banks to issue stablecoins. FSC Chairman Peng Jinlong argues that the bill’s passage would facilitate Taiwanese investor participation in the virtual asset market.

The report quotes Zhuang Xiuyuan, a director at an unidentified bank, as saying that all stablecoins issued in Taiwan will require FSC approval. Xiuyuan suggested that unlike the current system where issuers self-certify their stablecoin backing, the new regime would see the regulator providing issuer qualifications.

Jinlong meanwhile disclosed that the stablecoins will be jointly managed by banks and Taiwan’s central bank.

Revelations that Taiwan plans to unveil a regulatory framework for virtual asset service providers (VASPs), including provisions for bank-issued stablecoins, come amid a U.S. push to regulate stablecoins.

One of the U.S. bills, the Lummis-Gillibrand Responsible Financial Innovation Act, mandates that issuers back stablecoins with high-quality liquid assets, such as short-term U.S. Treasury securities. Like the FSC draft bill, the Lummis-Gillibrand proposal requires issuers of payment stablecoins to obtain a federal license.

The Stablecoin TEFRA Act, backed by Rep. Patrick McHenry, proposes that only banks be allowed to issue stablecoins. While the McHenry-backed bill may seemingly have limited consumer protection provisions, the Lummis-Gillibrand bill is said to include provisions for consumer protection, such as disclosure requirements and anti-money laundering safeguards.

Similarly, the FSC’s draft VASP bill reportedly emphasizes anti-money laundering protocols and risk assessments.