Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), has granted Cathay Securities the country’s first security token offering (STO) license.
According to local news reports Report On November 9, Cathay Securities’ “Sunshine Green Yield” STO bond was approved by the regulatory authorities, with a term of six years, an initial annual interest rate of 3.5%, and an initial principal amount of NT$30 million (US$930,000).
Through token subscription, business owners can purchase green electricity on the market under favorable conditions for environmental, social and corporate governance initiatives, and receive floating interest payments of up to 5.8% per year. Subshine Green Yield bonds will trade for the first time on Cathay Pacific’s internal STO trading platform on December 12.
Since 2019, the FSC has classified tokenized assets as securities, providing an open avenue for financial institutions to apply for licenses. However, issuers must adhere to a fundraising limit of $930,000 and can only conduct a maximum of two STOs per year. These products are also only available to businesses and accredited investors, for the latter they can only purchase STOs up to $9,300.
In order to create reliable STO interest rate pricing, Cathay Securities collaborated with risk control technology company Numerix and Professor Ye Zongying of National Chung Hsing University to develop Taiwan’s first STO evaluation model. The company claims that the model is “95% accurate” in calculating the probability of default by small and medium-sized enterprises.
Cathay Securities, established in 2004, is one of Taiwan’s largest financial services companies. The company serves millions of investors and brokerage clients.
Related: Taiwan Submits Cryptocurrency Bill to Congress
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