OSL becomes first HK Type 1 SFC-licensed broker to distribute security tokens

Rick Steves

OSL Digital Securities Limited (OSL) has distributed security tokens to professional investors in Hong Kong in a private security token offering (STO). In doing that, the crypto specialist became the first Type 1 SFC-licensed digital asset broker to issue and execute an STO in Hong Kong, thus paving the way for innovative investing in regulated […]

OSL Digital Securities Limited (OSL) has distributed security tokens to professional investors in Hong Kong in a private security token offering (STO).

In doing that, the crypto specialist became the first Type 1 SFC-licensed digital asset broker to issue and execute an STO in Hong Kong, thus paving the way for innovative investing in regulated digital assets.

The pioneering STO had the participation of Animoca Brands, Head & Shoulders Financial Group, China Fortune Financial Group Limited, Volmart, and Monmonkey Group Asset Management Limited.

HK opens to issuance and distribution of tokenized securities

OSL stated this ‘proof-of-concept’ opens the door to a new market for the issuance and distribution of tokenized securities through licensed intermediaries in Hong Kong and sets the industry standard for STOs globally.

In this particular STO, each token represents a USD10,000 unit of a bitcoin-linked, coupon-rate USD bond. The bond was issued by a subsidiary of OSL parent company, BC Technology Group (BC Group), and BC Group also acted as the bond guarantor.

The tokens were developed using the Ethereum blockchain, have a three-month tenor and carry a fixed and a bonus coupon linked to bitcoin performance.

Yat Siu, Co-Founder and Executive Chairman at Animoca Brands, said: “The digital asset industry, particularly Web3 and tokenized securities, is revolutionizing and modernizing traditional financial services. Like NFTs and other digital assets, STOs have the potential to create new markets and distribution channels and provide enhanced digital property rights for market participants. We’re thrilled to participate in this placement with OSL, which is an innovative global leader in the space and the first licensed Type 1 digital asset broker in Hong Kong.”

Wayne Trench, Chief Executive Officer of OSL, said: “The OSL STO transaction is a viable model for security token issuance and distribution of digital tokens by regulated operators. We designed the issuance to demonstrate the immense value and ease-of-distribution for a security token issued on a public blockchain. The token architecture uses smart contract technologies to permit transparent transfers of security tokens on the public blockchain between hosted and private wallets and is fully compliant with securities laws and AML requirements.”

SFC-regulated OSL well placed to offer STO placements

OSL acted as the bookrunner, placing agent, fiscal and paying agent, transfer agent, registrar, calculation agent, tokenization technology partner, and trading venue.

Dr. Stanley Choi, Chairman of Head & Shoulders Financial Group, said: “We’re proud to be part of this milestone STO as it perfectly aligns with our steadfast belief that blockchain technology products provide enhanced security and efficiency to markets, and are elevating modern financial services to a new level of innovation. Head & Shoulders Financial Group is thrilled to partner with BC Group and OSL and is committed to the growth of the blockchain ecosystem in Hong Kong and beyond.”

Ken Lo, Executive Director and Deputy Chairman of BC Group, said: “This successful STO placement is a significant milestone for Hong Kong’s capital market, as it presents tremendous opportunities for issuers and investors to transact digitally based on blockchain technologies in an efficient, safe and reliable way. This proves our ability to provide secured solutions in digital assets, including deal origination, tokenization, trading, and custody in a regulated framework.”

OSL Digital Securities holds a license for Type 1 (dealing in securities) and Type 7 (automated trading service) regulated activities related to digital assets from the Hong Kong Securities and Futures Commission (SFC), which allows it to issue and distribute digital securities through security token offerings to professional investors.

The Hong Kong Monetary Authority (HKMA) and the SFC now allow registered institutions and licensed corporations to provide digital asset investment services by partnering only with SFC-licensed virtual asset trading platforms.

OSL is an insured SFC-licensed digital asset platform that provide prime brokerage, custody, exchange, and SaaS services for institutional clients and professional investors.

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