Deposit Tokens

The second session of the seminar was led by Professor Yueh-Ping Yang , Deputy Director of CIEL, with Professor Ying-Hsin Tsai as discussant. The session focuses on “Tokenization of Payment Instruments”. The seminar provided an in-depth analysis of the institutional framework, risks and future regulatory directions of payment tokenization from comparative perspectives.

Operation Models and Risks of Stablecoins
Professor Yang noted that stablecoins share many characteristics with tokenized forms of e-money. Using the distinction between primary and secondary markets, he explained the legal structure of stablecoins: while subscription and redemption in stablecoin’s primary market resemble e-money, stablecoin’s secondary-market circulation is beyond the offeror’s control and more depends on virtual asset service providers. As a result, stablecoin faces new risks in addition to that of e-money in areas such as AML compliance, ledger governance, and price de-pegging.

Global Regulatory Trends: Comparative Observations
Professor Yang further outlined global developments in stablecoin regulation. Jurisdictions such as Japan and Singapore regulate stablecoins under their payment laws, while the EU treats stablecoins as a form of e-money token. The United States, lacking a federal-level payment law, sometimes tend to conceptualize stablecoins as deposit-like products.

Japan’s Regulatory Design and Industry Strategy
Professor Tsai added that Japan pioneered a dedicated legal framework for stablecoins in 2022, placing it at the global forefront. Using JPYC’s yen-denominated stablecoin as an example, she explained that its reserve assets primarily consist of government bonds and cash. She also highlighted how Japanese banks are actively building tokenization infrastructure through the Progmat platform. Nonetheless, tokenization also introduces challenges for banks, including reduced fee income, more complex liquidity management, and diminished control over data.

Regulatory Directions in the Tokenization Era
Professor Tsai emphasized that regardless of stablecoins, deposit tokens, or CBDCs, the core of future payment instruments will remain in the hands of financial institutions and central banks. Payment tokenization compels regulatory frameworks to rethink functionality, risks, and responsibility allocation. As the system continues to evolve, cross-disciplinary collaboration and forward-looking planning will be crucial for Taiwan as it navigates global fintech transformation.

Amid the rapid evolution of global fintech, key questions persist: how can regulatory frameworks balance innovation and stability, and how should they address cross-border supervision challenges brought by new forms of payment instruments? CIEL will continue advancing research in these areas, striving to help shape a forward-looking and resilient legal framework for Taiwan.