Taiwan will implement securities token offerings (STOs) cautiously, the country’s Financial Supervisory Commission has revealed. The FSC also revealed that it intends to introduce new laws for the crypto industry by June.
As revealed by local news portal the Taipei Times, the STOs will have a limit at first as the FSC assesses their success. Interested parties can only raise NT$30 million ($973,489). The regulator would, however, not allow blockchain-based tokens as equities.
The Securities and Futures Bureau Deputy Director-General Tsai Li-ling further clarified the extent to which the security tokens would be used. In a phone interview with the Taipei Times, she explained:
“The securities tokens are issued in foreign countries as digital assets based on blockchain technology. So far, holders of securities tokens enjoy certain ownership in the issuing companies and can receive dividends as if they are investing in stocks. They can also receive interest payments from the sale of securities tokens as with corporate bonds.”
Securities tokens would fall squarely under the traditional securities regulations, she said. This is because they possess attributes similar to traditional securities. Nevertheless, the FSC would only allow securities tokens to offer interest payments as bonds. It would also require the issuers to clearly outline how many such tokens they intend on distributing.
Currently, the regulator will prohibit companies from offering equities-like tokens. This is because equities are regulated by the country’s Company Act. In due time, the FSC will strive to make equities-like tokens available, but it would have to be after being satisfied with the progress that STOs make.
The FSC settled on the $973,000 limit after discussions with some of the interested parties, Tsai revealed. The commission believes the amount is sufficient for small and medium-sized enterprises. The doors aren’t closed for those companies that wish to raise a higher amount. However, they would have to run experiments in a regulatory sandbox for the FSC to monitor the risks. In such setups, the limit would be raised to $6.5 million.
Despite a recent surge in popularity for securities tokens, some regulators have remained cautious. In Hong Kong, the Securities and Futures Commission recently asked investors to be wary when investing in STOs. The commission reminded investors that they can incur massive losses by investing in STOs, including from hacks.