OSL Digital Securities, an Hong Kong digital asset trading platform has attained the status of the first digital assets broker with Type 1 registration from the Securities and Futures Commission (SFC). The exchange attained this position after it successfully partook in a security token offering (STO). It distributed security tokens to professional investors in Hong Kong.
For the transaction, OSL had acted in the capacity of the book runner, registrar, calculation agent, and placing agent. The exchange was also a transfer agent, fiscal and paying agent, tokenization technology partner, and trading venue. Generally, OSL Digital Securities was the sole provider of end-to-end services for the STO transaction.
The private STO had participation from the non-fungible token (NFT) and metaverse investor Animoca Brands. Other participants are Head & Shoulders Financial Group, China Fortune Financial Group Ltd., Volmart, and Monmonkey Group Asset Management Limited.
The Security Token Offering (STO)
The STO is a demonstration of an innovative proof-of-concept for investing in regulated digital assets. Therefore, whenever an STO is conducted, an issuer sells security tokens which are later sold on security token exchanges. Each of the said Ethereum (ETH) backed tokens will represent a 10,000 dollar coupon rate of USD bond, linked in performance to Bitcoin (BTC).
Noteworthy is the fact that the tokens all have a three-month tenor and also carry a fixed bonus coupon linked to bitcoin performance. The bonds were issued by a subsidiary of the OSL parent company, BC Technology Group which acted as the bond guarantor.
According to an OSL blog post, “This 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.”
Wayne Trench, CEO at OSL explained that the OSL STO transaction is a viable model for security token issuance. Also a model for the distribution of digital tokens by regulated operators. The technology used in the design of the token authorizes transparent transfers of security tokens between hosted and private wallets.
Also, the technology is fully compliant with the anti-money laundering (AML) schemes and many other security laws. Additionally, OSL holds a Type 7 license for automated trading services from Hong Kong SFC.