The SFC’s guidance provides helpful clarity amidst growing interest in security token offerings.

By Simon Hawkins and Kenneth Hui

On 28 March 2019, the Hong Kong Securities and Futures Commission (SFC) issued a policy statement on security token offerings (STOs) summarizing the legal and regulatory requirements applicable to parties engaging in STOs. This guidance follows the SFC’s 5 September 2017 policy statement on initial coin offerings (ICOs).

STOs typically refer to specific offerings which are structured to have features of traditional securities offerings, and involving security tokens that are digital representations of ownership of assets (e.g., gold or real estate) or economic rights (e.g., a share of profits or revenue) using blockchain technology.