The Securities and Futures Commission (SFC) of Hong Kong recently released a set of official proceedings and guidelines on security token offerings on March 28. The document states the requirements needed to proceed with Security Token Offerings based activities legally in the country.
What it states?
The official statement begins with defining a security token and STOs stating that STOs are specific set offerings possessing characteristics similar to traditional system securities offerings. They also include security tokens, which are basically a blockchain based digital stamp of proprietorship of your financial assets.
The SFC also states that security tokens are deemed under “securities” as per the guidelines established by Securities and Futures Ordinance of Hong Kong. Thus, they are bounded by the same security guidelines and regulations. The SFC further asserts that without the requisite license securities trading is highly forbidden and illegal. Mediators that plan on dealing with STOs are bounded by law to adhere to the Code of Conduct for the government registered businesses.
The guidance firmly states that STO related businesses are required by law to comply with the formerly issued guidelines in November 2018. The said guidance formulated three set of rulings.
The first ruling emphasized the prerequisite business enrolment requirements along with the sale of STOs to only be branched out to executive investors. The second ruling states that the mediators involved in dealing with STOs should be equally equipped with all the information concerned with the particular STO. The mediator is also required to conduct and attend to the investors’ queries and doubts. The last ruling emphasizes transparency in the information provided to the investors as well as the necessary risks affiliated with digital investments.