Taiwan’s Financial Supervisory Commission (FSC) announced on the 22nd that banks may immediately apply to pilot “deposit token” services, opening the first door for regulatory easing in Taiwan’s financial sector to bring blockchain technology into deposit clearing and settlement. Banking Bureau Director-General Tung Cheng-chang revealed that Taishin Bank has already expressed its intent to participate through the FSC’s regulatory consultation channel and is currently the only financial institution to do so. The initial phase will focus on intra-bank clearing and settlement, without involving cross-bank clearing for now.

FSC Chairman Peng Jin-lung announced the policy during a regular press conference explaining the market excellence development plan. He stated that in response to the international trend of real-world asset (RWA) tokenization and drawing on the experience of deposit token development in various countries, the FSC has decided to open applications for bank pilot programs, allowing institutions to accumulate practical operating models, technical applications, and risk management experience as a reference for future regulatory adjustments.

Tung Cheng-chang further explained that deposit tokens represent or record bank deposits through blockchain or distributed ledger technology (DLT) in a new format. Their legal nature remains that of “bank deposits,” and operations are governed by the existing Banking Act and related regulations, representing an extension of existing business models. Banks may apply to the FSC under the Guidelines for Financial Industry Business Pilot Applications.

He emphasized that once deposits are placed on-chain, their nature is no different from fiat currency representation. Enterprises holding deposit tokens will still recognize them directly as “deposits” on financial statements, not as other asset categories. Banks issuing deposit tokens must still set aside deposit reserves in accordance with existing regulations, and all deposit insurance mechanisms and legal frameworks remain fully applicable.

Two Clearing and Settlement Models; Financial Information Service Co. Plays a Key Role

Regarding the clearing and settlement architecture for deposit tokens, Tung Cheng-chang explained that in practice there are two models. The first involves a bank issuing its own deposit tokens and using blockchain to conduct clearing and settlement between the bank and its customers. The second involves cross-bank clearing, where the Financial Information Service Co. will play an important role in cross-bank clearing and settlement.

He noted that the FSC has not imposed rigid limits on the pilot scope, but based on preliminary understanding, banks currently interested will start with “intra-bank clearing and settlement.” Taking trade finance as an example, if importers, exporters, or both parties to a transaction are customers of the same bank, settlement can be completed directly on that bank’s internal on-chain ledger, eliminating the cumbersome traditional processes of issuing letters of credit and negotiating documents, thereby improving remittance efficiency.

Tung Cheng-chang stated that if existing commercial activities have already moved onto blockchain—such as on-chain contract execution—and the cash flow cannot be synchronized on-chain, efficiency cannot be maximized. Banks issuing deposit tokens enable customers to complete currency settlement directly on-chain, allowing smart contract execution and cash flow conversion to occur on the same underlying infrastructure.

Five Key Areas Required in Pilot Applications

Banks seeking to apply for deposit token pilot programs must submit documents in accordance with relevant guidelines and specifically address five key areas in their business plans:

1. The pilot scope and use cases for deposit tokens.
2. The issuance, transfer, redemption, and destruction processes for deposit tokens, along with an analysis of differences from existing deposit and remittance (transfer) operations.
3. Reconciliation, account verification, and control mechanisms between deposit accounts and token ledgers.
4. The technical architecture, system operations, and security control mechanisms to be used, such as distributed ledger technology or blockchain architecture, nodes, wallets, and smart contracts.
5. Redemption, destruction, and customer protection mechanisms upon expiration or termination of the pilot program.

The FSC emphasized that it will continue to monitor domestic and international trends in deposit tokens and RWA tokenization, and through bank pilot programs further understand market demand, business operations, and related risks, while timely reviewing and amending relevant regulatory frameworks and legal provisions to balance financial innovation, market stability, and customer protection.

Application Scenarios Unrestricted; Banks to Plan Independently

Regarding potential future application scenarios for deposit tokens—whether they include trade finance, virtual currency investment, wealth management, or consumer finance such as credit card payments or loan repayments—Tung Cheng-chang stated that the FSC will not impose restrictions on banks, and each bank will plan flexibly based on its own risk appetite, target customer profiles, and resource allocation.

He revealed that Taishin Bank is currently the only bank that has approached the FSC through its “regulatory consultation” channel to express interest and seek communication. However, since the pilot guidelines were just released, neither Taishin nor any other bank has formally submitted a specific business plan yet.

Another important backdrop to this policy is the “three-track finance” concept proposed by Peng Jin-lung, encompassing traditional finance, digital finance, and decentralized finance. RWA tokenization involves issuing real assets such as real estate, gold, stocks, and bonds on blockchain, while deposit tokens provide bank deposits with on-chain circulation and settlement capabilities within this framework, filling a critical gap in the cash flow component of decentralized finance.

Tung Cheng-chang noted that bank deposit tokenization in several European and American countries is still in the proof-of-concept (POC) stage. The FSC’s regulatory easing to open pilot programs for banks primarily targets relevant physical commercial activities and cash flow settlement, keeping Taiwan’s development pace in line with international trends.

The FSC also announced on the same day that the Taiwan stock market dashboard will launch on the 23rd, aggregating information including credit business and market leverage data, default statistics, and revenue trends of listed and over-the-counter companies. Regarding virtual asset supervision, the nine sub-regulations of the Virtual Asset Service Act have completed internal discussions, with public hearings expected to begin in October. If all goes smoothly, draft regulations may be announced in November or December, with formal release in the first quarter of next year.