The Financial Supervisory Commission of Taiwan has granted its inaugural license for securitized tokens.
Cathay Securities is authorized to issue tokenized green bonds valued at $930,000 every six months.
Taiwan's Financial Supervisory Commission (FSC) has granted the first security token offering (STO) license in the country to Cathay Securities, as reported by local news on November 9. Cathay has received regulatory approval for its "Sunshine Green Yield" STO bonds, featuring a six-year maturity period, an initial annual interest rate of 3.5%, and an initial principal amount of 30 million New Taiwan Dollars ($0.93 million).
Through the token subscriptions, business owners can acquire green electricity in the market for environmental, social, and corporate governance initiatives under favorable terms. They will also receive variable interest rate payments of up to 5.8% per year. Trading for the Sunshine Green Yield bonds is set to commence on December 12 on Cathay's in-house STO exchange platform.
Since 2019, the FSC has categorized tokenized assets as securities, providing a clear pathway for financial institutions to apply for licensing. However, issuers must adhere to a fundraising limit of $930,000 and are restricted to a maximum of two STOs per year. These offerings are exclusively available to enterprises and accredited investors. In the case of the latter, their maximum STO purchase is capped at $9,300.
Cathay Securities collaborated with risk-control technology firm Numerix and Professor Ye Zongying at National Chung Hsing University to develop Taiwan's first STO evaluation model for credible interest rate pricing. The company asserts that the model is "95% accurate" in calculating the default probability of small and medium-sized businesses.
Established in 2004, Cathay Securities stands as one of the largest financial services firms in Taiwan, catering to millions of investors and brokerage clients.