Taiwan to test CBDC prototype via 'digital voucher' system as soon as year-end

Taiwan may start to test a central bank digital currency prototype as soon as the end of this year, the central bank said today.

The CBDC prototype would not employ blockchain or smart contracts. Rather, it's planned to be implemented through the Taiwanese digital ministry’s upcoming governmental “digital voucher” system.

Chin-Long Yang, governor of Taiwan’s central bank, said at a briefing at the parliament on Wednesday that the central bank plans to collaborate with the Ministry of Digital Affairs on the CBDC prototype that could be integrated into the digital ministry’s digital voucher platform. The Taiwanese government has previously issued stimulus vouchers to boost consumption.

Yang said that in the future, government agencies would be able to issue digital vouchers through the system. The digital ministry would oversee voucher distribution, while the central bank would manage the subsequent payment and settlement operations after users spend the digital vouchers from their wallets.

While Yang explained that there’s no fixed timeline for CBDC pilots or issuance, another central bank official — in response to a lawmaker’s question — said that it may start CBDC prototype testing for the digital voucher system at the end of this year or early next year.

The digital voucher system may commence testing in August and go live in October based on current plans, local newspaper United Daily News reported Wednesday, citing industry sources familiar with the matter. One source said that the digital voucher system could be considered a “warm-up” for CBDC pilots, as the CBDC issuance may follow a similar path to that of digital vouchers.

Mulling special crypto law

Also at the Wednesday briefing, Jin-Lung Peng, chair of the Financial Supervisory Commission, said that the regulator is mulling a special law proposal for crypto assets that it plans to submit to the Executive Yuan, Taiwan’s highest administrative organ, in June 2025.

The crypto industry remains largely unregulated in Taiwan, with the FSC requiring crypto service providers to comply with anti-money laundering laws. Last month, the local crypto sector officially established an industry association to formulate self-supervisory rules under the government’s guidelines. 

In May, the Ministry of Justice proposed amendments to the existing AML laws that would require domestic and overseas crypto firms seeking to operate in Taiwan to register for AML compliance. Failure to do so could result in imprisonment for up to two years.