Taiwan's Financial Supervisory Commission Grants Inaugural Securitized Token License

Taiwan’s First Security Token Offering License

The Financial Supervisory Commission (FSC) in Taiwan has recently granted Cathay Securities the country’s inaugural security token offering (STO) license. The approval is for Cathay’s “Sunshine Green Yield” STO bonds, which have a maturity period of six years, an initial annual interest rate of 3.5%, and an initial principal amount of 30 million New Taiwan Dollars ($0.93 million).

These bonds allow enterprise owners to purchase green electricity on the market for environmental and social initiatives, receiving variable interest rate payments of up to 5.8% annually. Trading for the Sunshine Green Yield bonds will commence on Dec. 12 on Cathay’s in-house STO exchange platform.

FSC Regulations and Requirements

Since 2019, the FSC has categorized tokenized assets as securities, providing an avenue for financial institutions to seek licensing. However, there are limitations such as a fundraising cap of $930,000 and a maximum of two STOs per year. Additionally, these offerings are only accessible to enterprises and accredited investors, with the latter limited to purchasing a maximum of $9,300 STOs.

Cathay Securities’ STO Evaluation Model

Cathay Securities collaborated with risk-control technology company Numerix and professor Ye Zongying at National Chung Hsing University to develop Taiwan’s first STO evaluation model. The firm claims that the model is “95% accurate” in calculating the default probability of small and medium-sized businesses.

About Cathay Securities

Established in 2004, Cathay Securities is one of Taiwan’s largest financial services firms, catering to millions of investors and brokerage clients.

Hot Take: Pioneering Move in Taiwan’s Crypto Landscape

Taiwan’s decision to issue its first STO license marks a significant step in embracing digital asset innovation within its regulatory framework. This move could potentially pave the way for more financial institutions to explore tokenized assets and provide alternative investment opportunities within the country’s market.