Taiwan’s Financial Supervisory Commission has granted Cathay Securities the inaugural license for a security token offering (STO). The landmark issuance, termed “Sunshine Green Yield,” marks a new chapter for financial instruments in the region. According to a local report, This STO, set to mature in six years, offers an initial annual interest of 3.5% on a principal amount of 30 million New Taiwan Dollars. This strategic step forward for Cathay highlights the potential for digital assets to coalesce with traditional financial services.
Strategic steps for sustainable investments
Cathay Securities’ “Sunshine Green Yield” bonds cater to enterprise owners interested in environmental sustainability. These green electricity tokens present a dual opportunity. Besides the initial investment, subscribers may receive up to 5.8% variable interest rate payments annually. Consequently, this initiative aligns with broader environmental, social, and corporate governance goals. Trading of these bonds will commence on December 12 on Cathay’s proprietary STO exchange platform.
When compared to Initial Public Offerings (IPOs) of traditional financial markets, Securities-based Virtual Currencies (STOs) use blockchain technology to recognize digital value that can be stored, exchanged, or transferred while being liquid. STOs possess several investment properties, including being funded by the investor, investing in a common cause or plan, the investor expecting to make a profit, and the profit primarily relying on the issuer’s or third-party’s efforts.
The FSC’s classification of tokenized assets as securities since 2019 has paved the way for this development. Nonetheless, financial institutions must adhere to stringent regulations. They face a fundraising ceiling of $930,000 and can launch no more than two STOs annually. These offerings target enterprises and accredited investors, the latter capped at purchasing $9,300 in STOs.
Cathay Securities has also collaborated with Numerix, a risk-control technology firm, and Professor Ye Zongying of National Chung Hsing University. Together, they have developed an evaluation model for Taiwan’s STO market, touted to possess a 95% accuracy rate in forecasting default risks for small and medium-sized enterprises. This innovative model is a testament to Cathay’s commitment to mitigating investment risk and enhancing the credibility of STO interest rate pricing.
Moreover, Cathay Securities, established in 2004, stands as a titan in Taiwan’s financial industry. The company boasts an extensive clientele, offering a myriad of services to millions of investors and brokerage clients. This recent development not only fortifies Cathay’s position in the market but also signals a progressive shift in Taiwan’s approach to sustainable investment opportunities. Hence, the launch of this STO could potentially set a precedent for future digital asset offerings within the region’s rigorous regulatory framework.
