OSL Digital Securities Limited (OSL) announced it became the first Type 1 SFC-licensed digital asset broker to distribute security tokens to professional investors in Hong Kong in a private security token offering (STO).
Participants in the offering include Animoca Brands, Head & Shoulders Financial Group, China Fortune Financial Group Limited, Volmart and Monmonkey Group Asset Management Limited.
The STO demonstrates an innovative ‘proof-of-concept’ for investing in regulated digital assets. 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.
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.
OSL provided the end-to-end services for the STO transaction, acting as the bookrunner, placing agent, fiscal and paying agent, transfer agent, registrar, calculation agent, tokenization technology partner and trading venue.
Animoca Brands Co-Founder and Executive Chairman Yat Siu 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.”
OSL CEO Wayne Trench 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. Through the STO, OSL reaffirms its position as a pioneer in the Hong Kong digital asset market. Blockchain-based digital securities represent the future of capital markets and financial products, and this is a key step in the adoption of this innovative and efficient technology.”
Head & Shoulders Financial Group Chairman Dr. Stanley Choi 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.”
BC Group Executive Director and Deputy Chairman Ken Lo 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 issued a joint circular on 28 January 2022, which for the first time allowed registered institutions and licensed corporations to provide digital asset investment services by partnering only with SFC-licensed virtual asset trading platforms.
Under the circular and with this STO, OSL has demonstrated its ability to play a central role leading bookbuilds for licensed partner brokers and banks on future STO issuances and other digital asset transactions.
About OSL and BC Technology Group
Backed by Asia’s leading public fintech and digital asset company, BC Technology Group, OSL is the region’s most comprehensive licensed digital asset platform.
OSL is the world’s first insured SFC-licensed digital asset platform to provide prime brokerage, custody, exchange and SaaS services for institutional clients and professional investors.
The company offers OTC, iRFQ and electronic trading services giving traders access to the world’s deepest liquidity pools, as well as secure and insured wallets to ensure the safekeeping of digital assets with timely transaction settlement.
BC Technology Group and the OSL platform are enabling institutional adoption of the digital asset class, setting the global standard for performance, security and compliance.