What looks like a technical choice actually determines the future direction of Taiwan’s monetary architecture.

FSC chairman Peng Jin Lung stated that the draft Virtual Asset Service Act has passed preliminary cabinet review and is entering a decisive legislative stage. Under the current roadmap, detailed rules for stablecoin regulation will be announced within six months, meaning a compliant local stablecoin could appear as early as late 2026. Regulators have also decided that initial issuers will be financial institutions rather than fully opening issuance to private companies.

The real suspense lies in the choice of reference currency. Chang noted that the stablecoin may be pegged to either the U.S. dollar or the New Taiwan Dollar depending on market demand, but no decision has been made. Behind this seemingly simple choice lies a profound shift for Taiwan’s monetary governance.

If the stablecoin is pegged to the New Taiwan Dollar, it effectively becomes an on-chain extension of the NT dollar and could help Taiwan preserve monetary sovereignty in a digital economy. But such a choice would require extremely strict safeguards for reserves, custody, and cross-border usage to prevent arbitrage, capital leakage, or offshore circulation of NT dollars.

If the stablecoin is pegged to the U.S. dollar, the situation changes entirely. A USD stablecoin sidesteps the most delicate aspect of NT-dollar policy: restrictions on offshore use. Taiwan has long enforced strict controls on the NT dollar’s overseas circulation, closing off nearly all channels that bypass domestic oversight. Yet a USD-pegged stablecoin is naturally suited for cross-border settlement and would not be subject to NT-dollar regulatory frameworks. In effect, it would create a digital value corridor operating outside the NT-dollar system — a shift far more consequential than the launch of a new financial product.

This is precisely why regulators are drafting exceptionally strict requirements: full reserve backing, complete asset segregation, and local custody. These measures minimize systemic risk and signal the government’s intent to strike a controlled balance between innovation and stability.

At a broader level, this move represents Taiwan’s first true entry into global stablecoin competition. The essence of a stablecoin is not simply its technology, but rather: Who issues it? What is it pegged to? Where are reserves stored? How does it circulate on-chain? The answers to these questions will determine whether Taiwan’s stablecoin becomes a tool designed to support the local financial system — or a frictionless cross-border asset that may weaken monetary controls.

The framework Taiwan has revealed so far reflects a cautious yet open approach. It acknowledges stablecoins as a foundational part of future financial infrastructure, while attempting to ensure that such a system develops under clear regulatory protection.

In the long run, Taiwan’s decision will serve as a test case:
In a global race toward monetary digitalization, can a smaller but technologically sophisticated and regulation-savvy economy build its own stablecoin system without compromising monetary autonomy?

The answer may only become clear after 2026.

What looks like a technical choice actually determines the future direction of Taiwan’s monetary architecture.

FSC chairman Peng Jin Lung stated that the draft Virtual Asset Service Act has passed preliminary cabinet review and is entering a decisive legislative stage. Under the current roadmap, detailed rules for stablecoin regulation will be announced within six months, meaning a compliant local stablecoin could appear as early as late 2026. Regulators have also decided that initial issuers will be financial institutions rather than fully opening issuance to private companies.

The real suspense lies in the choice of reference currency. Chang noted that the stablecoin may be pegged to either the U.S. dollar or the New Taiwan Dollar depending on market demand, but no decision has been made. Behind this seemingly simple choice lies a profound shift for Taiwan’s monetary governance.

If the stablecoin is pegged to the New Taiwan Dollar, it effectively becomes an on-chain extension of the NT dollar and could help Taiwan preserve monetary sovereignty in a digital economy. But such a choice would require extremely strict safeguards for reserves, custody, and cross-border usage to prevent arbitrage, capital leakage, or offshore circulation of NT dollars.

If the stablecoin is pegged to the U.S. dollar, the situation changes entirely. A USD stablecoin sidesteps the most delicate aspect of NT-dollar policy: restrictions on offshore use. Taiwan has long enforced strict controls on the NT dollar’s overseas circulation, closing off nearly all channels that bypass domestic oversight. Yet a USD-pegged stablecoin is naturally suited for cross-border settlement and would not be subject to NT-dollar regulatory frameworks. In effect, it would create a digital value corridor operating outside the NT-dollar system — a shift far more consequential than the launch of a new financial product.

This is precisely why regulators are drafting exceptionally strict requirements: full reserve backing, complete asset segregation, and local custody. These measures minimize systemic risk and signal the government’s intent to strike a controlled balance between innovation and stability.

At a broader level, this move represents Taiwan’s first true entry into global stablecoin competition. The essence of a stablecoin is not simply its technology, but rather: Who issues it? What is it pegged to? Where are reserves stored? How does it circulate on-chain? The answers to these questions will determine whether Taiwan’s stablecoin becomes a tool designed to support the local financial system — or a frictionless cross-border asset that may weaken monetary controls.

The framework Taiwan has revealed so far reflects a cautious yet open approach. It acknowledges stablecoins as a foundational part of future financial infrastructure, while attempting to ensure that such a system develops under clear regulatory protection.

In the long run, Taiwan’s decision will serve as a test case:
In a global race toward monetary digitalization, can a smaller but technologically sophisticated and regulation-savvy economy build its own stablecoin system without compromising monetary autonomy?

The answer may only become clear after 2026.