Fundraising through security token offerings (STOs) would be approved starting from October at the earliest, which would particularly benefit start-ups, the Financial Supervisory Commission (FSC) said yesterday.
The STO regulations are to be a world first, as most of the commission’s foreign counterparts require STOs to comply with existing securities laws, FSC Chairman Wellington Koo (顧立雄) said.
“It was not easy to establish a set of regulations, considering there was little to reference in other nations. We needed to balance consumer protection and industrial growth, and curb market volatility,” Koo told a news conference in New Taipei City.
Although the regulations might not please everyone, they are the best version the commission could think of, he said, adding that the rules would be open to public comment for two months.
A securities token is a kind of virtual currency. Unlike bitcoin, which has no central issuer and can only be created through a process called “mining,” securities tokens are launched by companies that wish to raise funds.
The commission did not change a NT$30 million (US$964,599) fundraising limit stipulated in the draft regulation, although the funds would be exempted from some administrative requirements.
Companies wishing to raise more funds would need to apply to run an experiment in the regulatory sandbox.
However, the commission loosened restrictions on investors by allowing them to purchase NT$300,000 in securities tokens for a single project, up from the previously proposed NT$100,000, based on investors’ opinions shared during a public hearing, Koo said.
To prevent investors from manipulating token prices, the number of tokens traded per day may not exceed half of the total number of issued tokens, Koo said.
Privately held companies registered in Taiwan would be allowed to conduct STOs, whether local or foreign, while listed companies cannot, as they already have other fundraising tools, he said.
The commission has not yet received any STO applications, but start-ups are expected to show interest, as they have fewer fundraising tools, Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told the Taipei Times.
Companies would not be permitted to issue tokens on more than one exchange, which is responsible for checking issuers’ qualifications and overseeing their white papers, Koo said.
Exchanges that wish to launch their own securities tokens would be monitored by the Taipei Exchange, Koo said.
Only exchanges with paid-in capital of more than NT$100 million could issue STOs after obtaining a securities dealer license, although they may only help companies conduct one STO per year and the cumulative funds raised may not exceed NT$100 million, the commission said.
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