Taiwan’s financial regulatory authority, the Financial Supervisory Commission (FSC), has taken a significant step in the burgeoning field of digital finance. The FSC awarded the country’s first security token offering (STO) license to Cathay Securities, a milestone in Taiwan’s financial technology landscape.
Cathay Securities, a leading financial services firm in Taiwan, has received approval for its pioneering “Sunshine Green Yield” STO bonds. These bonds, with a maturity period of six years, offer an initial annual interest rate of 3.5%. The initial principal amount is set at 30 million New Taiwan dollars, approximately $930,000.
This innovative financial product enables enterprise owners to invest in green electricity, aligning with environmental, social, and corporate governance (ESG) initiatives. Investors are offered favorable conditions and the possibility of variable interest rate payments up to 5.8% per year. Cathay Securities is set to launch trading for these bonds on December 12 on its in-house STO exchange platform.
Since 2019, the FSC has categorized tokenized assets as securities, paving the way for financial institutions to explore this new domain. To ensure regulatory compliance, issuers are limited to a fundraising cap of $930,000 and a maximum of two STOs per year. These offerings are exclusive to enterprises and accredited investors, with the latter group restricted to a maximum investment of $9,300 in STOs.
Cathay Securities, in its quest for a reliable STO interest rate pricing mechanism, has collaborated with Numerix, a risk-control technology firm, and Professor Ye Zongying from National Chung Hsing University. Together, they have developed Taiwan’s first STO evaluation model, touted to be 95% accurate in assessing the default risk of small and medium-sized enterprises.
Founded in 2004, Cathay Securities has established itself as a key player in Taiwan’s financial sector, serving a vast clientele of investors and brokerage clients. This latest development not only fortifies Cathay Securities’ position in the market but also signals Taiwan’s progressive stance in embracing and regulating emerging financial technologies. The Sunshine Green Yield STO is a testament to Taiwan’s commitment to sustainable investment solutions and its pioneering role in integrating traditional finance with digital innovation.
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