Taiwan could see its first locally issued stablecoin go live in the second half of 2026, though regulators have not yet decided on the currency the token will be tied to.

Local media in Taiwan report Financial Supervisory Commission Chair Peng Jin-long told lawmakers this week that the draft Virtual Assets Service Act has cleared initial cabinet reviews and could pass its third reading next session. Regulations specific to stablecoins would follow within six months, putting the earliest possible launch in late 2026.

The legislation does not restrict issuers to banks, although the FSC and Taiwan’s central bank have agreed that financial institutions will lead issuance in the initial stage, Peng said.

What remains unclear is the currency backing: A stablecoin is a digital token whose value is tied to that of a real-world asset such as a fiat currency. Peng said the stablecoin could be pegged to the U.S. dollar or the Taiwan dollar, depending on market demand, but no decision has been made.

A U.S. dollar-backed coin would bypass the thorniest issue in Taiwan’s financial system: the strict limits on exporting the Taiwan currency offshore.

Taiwan’s currency cannot legally circulate offshore, and the central bank has a long record of policing attempts to use it for transactions without a direct connection to the island.

Stablecoins by design facilitate cross-border settlement, a feature that could undermine decades of efforts to keep the currency onshore and prevent unofficial offshore pricing.

For now, regulators are drafting rules based on full reserve backing, strict segregation of assets and domestic custody requirements.

But the basic question of what currency Taiwan’s first stablecoin will represent remains unresolved, and the choice will determine whether the project becomes a low-risk payments tool or a challenge to the island’s currency framework.