Taiwan STO Regulations | About the spread of security tokens and the maturity of the capital market

STO

It has been considered that the STO promotes efficient financing of companies, promotes industry in each country, revitalizes capital markets, and fosters investors.

 

The Taiwan Regulatory Authority, the Taiwan Financial Supervisory Commission, is working to develop a legal framework for the STO to ensure the security of the securities market.

 

This time, strict STO regulations are applied as follows.

 

・ General investors cannot participate in STO and are limited to certified investors
・ Procurement limit: NT $ 300,000 (approx. 100 million yen)
・ New Taiwan dollar (NT $) denominated investment only
・ Application for securities dealer license is required
・ Companies issuing STO must contract with Taiwan Central Storage Center

 

In addition, this STO regulation applies only to STOs conducted on the same trading platform.

 

For security token companies, conditions such as “minimum investment capital of $ 100 million and operating profit of NT $ 10 million” were set. (Company that runs only security token business)

 

It is necessary to conduct further research on what standards the Taiwan Financial Supervisory Commission has established regulations on and how they envision future market formation.

 

Since the content of regulations is too strict, there is an increasing demand for a review of regulations.

 

It has been considered that the STO is a method of raising funds that complies with laws and regulations, and has the advantages of automating business processes that utilize smart contracts and activating investment through crypto assets.

 

Financing through the STO is already widespread in the United States because of the detailed legal framework such as the SEC exemption regulation “Regulation”.

 

However, in Taiwan and Japan, the history of deregulation efforts in the private placement market has a shorter history than in the United States, and investment in startup companies by VC and PE funds has only recently attracted attention.

 

In recent years, the private equity investment bubble has taken place due to the effects of monetary easing after the Lehman shock.

 

Cases such as overwork and IPO goals like Wework were also confirmed.

 

In the United States, where the financing environment has been improved and growth companies are actively investing, unique initiatives such as tokenization of real assets that can expect more stable capital gains and yields are being made.

 

In countries with large and mature capital markets, such as the United States, the STO is positioned as an effective “one of the financing methods” in the private equity market.

 

In the United States, the STO will be actively engaged in compliance with the “Regulation” from 2018.

 

However, the spread of STO in countries such as Taiwan and Japan requires the development of the entire capital market.

 

To that end, it is increasingly important to ensure the security of the existing securities market through strict regulations.

 

There is a large gap in the maturity of the capital markets between the US and other countries (especially emerging countries), which has been compliant with “Regulation” and has been able to raise funds in numerous private placement markets.

 

We believe that prioritizing the development of the existing securities market will lead to the spread of the STO in the future.

 

In Japan, it is important to invest and support startup companies through venture capital in order to promote the next-generation industry.

 

In addition, the success of M & A on crypto asset exchanges by securities companies is expected to lead to the growth of new asset classes.

 

One of the merits of raising funds with a security token is that the related services can be made more efficient by the following services and system development.

 

Securitize iD: KYC (identity verification) efficiency
Instant Access: P2P security token transaction
TokenSoft Investment Accounts: Self-managed accounts
Knox wallet: Cold wallet for security token management
Securrency Interoperating System: An open framework that enables seamless integration of blockchain and existing financial infrastructure

 

How to utilize security tokens and related services toward the maturity of capital markets in each country will continue to require many discussions and use cases.

 

In the securities market, securities regulations have been established and enforced in each country, so careful introduction of security tokens is required.

 

Recently, real estate security tokens are expected to increase transaction volume.

(Small real estate: In the US, it is a tokenization of partial ownership of LLC, so it complies with RegS, D)

 

Utilizing security tokens in the real estate investment market is creating a global market.

 

It is important to explain security tokens by understanding industrial promotion and capital market activation from a broader perspective.

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