Taiwan’s Financial Supervisory Commission (FSC) achieved a milestone by granting Cathay Securities the nation’s inaugural security token offering (STO) license. The “Sunshine Green Yield” STO, recently approved by regulators, boasts a six-year maturity, an initial annual interest rate of 3.5%, and an initial principal amount of 30 million New Taiwan dollars ($930,000).
Taiwan regulator approves Sunshine Green Yield
This groundbreaking STO introduces an innovative avenue for enterprise owners to partake in token subscriptions, enabling them to acquire green electricity under favorable market conditions. The primary objective is to support environmental, social, and corporate governance initiatives. Participants in the STO can benefit from variable interest rate payments, reaching up to 5.8% per annum. The trading debut for the Sunshine Green Yield bonds is scheduled for December 12 on Cathay’s in-house STO exchange platform.
Since 2019, Taiwan’s Financial Supervisory Commission has classified tokenized assets as securities, providing a regulatory framework for financial institutions to seek licensing. However, stringent conditions apply, including a fundraising cap of $930,000 and a limit of two STOs annually for issuers. These opportunities are exclusively available to enterprises and accredited investors, with the latter facing a maximum STO purchase limit of $9,300.
Green Finance Innovation takes center stage
Cathay Securities, a major financial services firm founded in 2004, has taken proactive measures to ensure the credibility of its STO interest rate pricing. Collaborating with risk-control technology company Numerix and National Chung Hsing University professor Ye Zongying, Cathay Securities developed Taiwan’s inaugural STO evaluation model. Claiming an impressive “95% accuracy,” the model calculates the default probability of small and medium-sized businesses.
The partnership with Numerix and academic expertise underscores Cathay Securities’ commitment to establishing a robust framework for STOs. As a prominent financial institution serving millions of investors and brokerage clients in Taiwan, Cathay’s venture into STOs aligns with the evolving landscape of digital finance. The Sunshine Green Yield STO not only signifies a pioneering move in Taiwan’s financial sector but also reflects the integration of blockchain-based financial instruments to promote sustainability and responsible business practices.
The focus on green initiatives within the STO is noteworthy, aligning strategically with global efforts to address environmental concerns. As trading for the Sunshine Green Yield bonds commences on December 12, market participants will likely scrutinize the implications of this novel approach to STOs. With Taiwan’s FSC paving the way for regulated tokenized assets, the industry will be closely monitored to observe how other financial institutions navigate this space and contribute to the broader adoption of digital securities in the country.
