Taiwan considers local stablecoin to reduce cross-border trade costs

Taiwan is preparing to introduce stablecoins into its financial system, and plans to limit early issuance to banks. As policymakers move closer to formal legislation, important questions are emerging. Should regulated stablecoins be pegged to the New Taiwan Dollar (NTD) or the US dollar?

The issue was raised at a forum on stablecoins and international trade hosted by the Taiwan External Trade Development Authority (TAITRA) on December 15th. Regulators and industry leaders discussed how digital currencies can reduce cross-border payment costs for Taiwanese businesses.

International payment fees can reach up to 5% and are often hidden across multiple layers in the form of sending and receiving wire fees and fees charged by intermediary banks. A USD-pegged stablecoin could ease cross-border payments and circumvent NTD’s offshore circulation restrictions, while NTD-linked tokens would be more closely aligned with Taiwan’s domestic payments ecosystem.

Taiwan dollar stablecoin as a “dark horse”

Alex Liu, CEO of MaiCoin and director of the Taiwan Virtual Asset Service Providers Association, said local currency stablecoins have the potential to support the next stage of Taiwan’s economic growth.

“It’s no surprise that payment providers are paying very close attention to stablecoins,” Liu said. “They promise they can lower these fees in a market that mirrors the traditional foreign exchange market.”

Liu emphasized that the role of the NTD stablecoin is functional rather than speculative, and is primarily designed for efficiency and risk management. He cited recent currency fluctuations related to US tariff announcements as evidence that Taiwanese exporters face increased exposure to exchange rate fluctuations.

Liu said the Taiwan dollar stablecoin will eventually become a standard payment tool, noting that the Taiwan dollar stablecoin already serves as a semi-stable instrument.

“The Taiwanese dollar is already, in some ways, one of the largest US dollar stablecoins in the world,” Liu said. “It is backed by approximately $600 billion in U.S. dollar-denominated assets.”

Liu described Taiwan’s stablecoin industry as a “dark horse” and pointed to Taiwan’s strong capital market. Taiwan’s stock market recently ranked among the world’s top 10 in terms of market capitalization, alongside countries such as Switzerland and Germany.

“Taiwan’s capital market is punching above its weight,” he said.

The long-awaited stablecoin bill

These discussions are unfolding as Taiwan prepares its first comprehensive stablecoin regulatory framework. Taiwan’s initial stablecoins will be regulated under the draft Virtual Asset Service Provider Law, which is currently under consideration by the Cabinet. After intergovernmental organizations provide input, the Executive Yuan will submit the bill to the Legislative Yuan for formal legislative consideration.

Taiwan Financial Supervisory Commission (FSC) Vice-Chairman Hsou-Yuan Chung said at the conference that the bill was drafted in response to the fact that stablecoins are starting to be seen as payment infrastructure rather than speculative assets, especially in cross-border transactions.

“AML rules alone are no longer sufficient,” Chung said. “When the industry uses digital assets for cross-border payments, stability becomes a primary requirement.”

Chung said Taiwan’s stablecoin framework would require 1:1 fiat backing and would explicitly exclude algorithmic models. He also pointed out that stablecoins issued in Taiwan do not need to be pegged only to NTD, but could be linked to other fiat currencies.

If deliberations proceed smoothly, the bill could become law in the first half of 2026.

Issuance rules and implementation model

Regulators have drawn clear lines between who can issue stablecoins and how they work. Taiwan’s central bank said the bank-only issuance approach is aimed at limiting early-stage operational and supervisory risks, rather than turning stablecoins into deposit-like products.

Under the proposed framework, stablecoins would be prohibited from paying interest and would be required to be fully backed by liquidity reserves, ensuring that they function as a means of payment rather than a replacement for bank deposits.

Looking ahead to implementation, Taiwanese stablecoins are likely to adopt a multi-issuer model similar to Hong Kong’s system, where multiple banks issue convertible Hong Kong dollar notes, rather than allowing a single exclusive issuer, said Alex Liu, CEO of MaiCoin and director of the Taiwan Virtual Asset Service Providers Association.

Impact on exporters and trade

Mr. Liu emphasized that the NTD stablecoin should be treated as public infrastructure to help Taiwanese exporters manage their balance sheets and reduce unnecessary exchange losses, especially as the global trade situation becomes more volatile.