The Financial Supervisory Commission (FSC) of Taiwan has granted the first security token offering (STO) license in the country to Cathay Securities. The company received regulatory approval for its “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).
Enterprise owners can use the token subscriptions to purchase green electricity on the market for environmental, social, and corporate governance initiatives, and receive variable interest rate payments of up to 5.8% per year. The trading for the Subshine Green Yield bonds is set to begin on December 12 on Cathay’s in-house STO exchange platform.
Since 2019, the FSC has classified tokenized assets as securities, allowing financial institutions to apply for licensing. However, there are fundraising limits of $930,000 and a maximum of two STOs per year for issuers. The offerings are only available to enterprises and accredited investors, with a maximum purchase limit for the latter set at $9,300 STOs.
To establish credible STO interest rate pricing, 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.
Cathay Securities, founded in 2004, is one of the largest financial services firms in Taiwan, serving millions of investors and brokerage clients.
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