Taiwan is preparing to unveil a draft law allowing banks to issue stablecoins pegged to the New Taiwan Dollar (TWD), as part of efforts to regulate virtual asset service providers.
Objectives and Goals of the Draft Law
The proposal aims to improve accessibility to cryptocurrencies through the use of stablecoins tied to Taiwan's national currency, differentiating them from others pegged to the US dollar, such as Tether and USD Coin.
Supervision and Requirements
The Financial Supervisory Commission, along with the central bank, will supervise all domestically issued stablecoins. The draft law will establish strict requirements for issuing these coins, including qualification standards for issuing firms and rules for token reserve allocation.
Impact on Financial System
Despite progress in integrating stablecoins into the financial system, their use in everyday transactions remains uncertain due to unresolved issues of monetary policy stability and potential financial risks.
The draft law marks an important step in regulating digital assets in Taiwan, but several challenges need to be addressed for the full integration of stablecoins into the economy.
