Yang Yueping Reveals the Regulatory Dilemma of STO: The Cost of Taiwan's "Stagnation"

As blockchain technology accelerates its development and Security Token Offerings (STOs) become the focus of global financial innovation, Yang Yueping directly points to the core issue in Taiwan’s regulatory framework: a conservative and incomplete regulatory system that is stifling local financing opportunities. This assistant professor from National Taiwan University’s Department of Law has raised sharp questions during academic and industry discussions on STOs, exposing fundamental flaws in Taiwan’s securities regulation mindset in the blockchain era.

Limited Issuance Market, Unregulated Secondary Market: The “Deviations” in Taiwan’s STO Regulations

Yang Yueping first highlights a serious contradiction in the Financial Supervisory Commission’s (FSC) regulatory approach in Taiwan: on one hand, there is almost no regulation of the secondary (trading) market; on the other hand, strict restrictions are imposed on the issuance market. This “reverse” approach has led Taiwan down an isolated path.

Comparing with the US approach reveals the problem. The US has not legislated specifically for STOs but relies on existing diverse issuance channels—such as Rule 504 (for small-scale offerings), Regulation A+ (crowdfunding rules), Regulation CF (equity crowdfunding), Rule 506 (accredited investor exemption)—to handle them. These channels each have their focus, forming a gradient-based financing ecosystem. In contrast, Taiwan’s securities issuance options are extremely monotonous, with cumbersome procedures, layered approvals, and high costs, discouraging many startups.

Tiered Management and a Compromise: The NT$30 Million Threshold

According to Taiwan’s FSC preliminary regulations on STOs, the authority adopts a tiered management strategy: STO projects raising NT$30 million or less are exempt from the filing obligations under Article 22, Paragraph 1 of the Securities and Exchange Act; projects exceeding NT$30 million must undergo a sandbox process under the Financial Technology Development and Innovation Experiment Act, and only after passing the experiment can they proceed according to securities law.

This plan seems to balance efficiency and safety, but Yang Yueping questions its necessity. Since current US regulations are sufficient to cover STOs, why does Taiwan need to “enact a special law” for STOs? The administrative priority behind this approach may avoid the hassle of amending laws but fails to address the fundamental issues.

Definition Disputes and Regulatory Dilemmas: The Era of Howey Test

Taiwan defines STOs by referencing the US Securities Act’s Howey Test, but this century-old standard faces multiple criticisms. Industry insiders debate its scope: some argue it is “overly broad,” misclassifying some functional tokens as securities; others believe it is “too narrow,” failing to regulate other securities tokens like equity or bonds; some question its “technological neutrality”—why only investment contracts issued on distributed ledgers are regulated, while offline paper contracts are not?

Three Major Fundamental Reform Proposals: Yang Yueping’s Vision

Faced with these issues, Yang Yueping proposes a clear solution—fully opening up multiple securities issuance channels, fully recognizing investment contracts as securities, and fully liberalizing the types of securities trading venues. If these reforms are realized, they will fundamentally change Taiwan’s STO ecosystem.

Deep Conflicts in Regulatory Logic: Legal Dilemmas of the New Era

Assistant Professor Zang Zhengyun from National Chengchi University’s College of Law further analyzes and pushes the issue to a deeper level. He points out that contemporary finance has entered an era where “the consumer is king,” and the relationship between capital and data has been redefined. Yet, Taiwan’s regulators still use century-old securities laws to regulate emerging technologies—this temporal dislocation is itself a root cause of systemic failure.

Zang Zhengyun emphasizes the dilemma of information disclosure. The traditional supervisory logic of securities law is “information disclosure,” but applying this to blockchain environments leads to absurd questions: “Who should determine the discrepancy between Source Code and whitepapers?” Who is responsible for inconsistencies between code and narrative? Regulatory agencies clearly lack answers.

He also highlights practical limitations of sandbox experiments. Although the FSC allows large-scale STOs into sandbox testing, resources are limited, startups face high entry barriers, and the chances of success are low. This makes the system intended to foster innovation actually a stumbling block for entrepreneurs. More critically, STOs originate from the decentralized philosophy of blockchain, yet regulators use centralized securities laws to regulate them—if this fundamental conflict is not resolved, STOs in Taiwan may face extinction.

Lack of Investor Education: Another Dimension of Systemic Reform

Lily Law’s junior partner, Qian Di Xiong, adds from a legal perspective that when fintech clashes with existing laws (such as pure online banking), regulators tend to respond by tightening controls rather than rethinking. He raises a sharp question: “Is there a need to distinguish on-chain data? Does the fact that pure online banking occurs online mean it is unregulated?”

Qian Di Xiong admits that Taiwanese investors overly rely on government protection, leading to insufficient risk awareness. Many investors complain to the FSC immediately after losses, prompting regulators to tighten industry controls. Therefore, the real reforms should target not only laws but also investors’ risk consciousness. “What should be most emphasized is investor education,” he stresses. Improving self-risk management is more important than excessive regulatory protection.

Losing in International Competition: The Historical Lesson of Taiwan’s Securities Law

Looking at the evolution of Taiwan’s securities regulations, a discouraging fact emerges: these regulatory frameworks have failed to establish Taiwan as a major international financing hub. Few foreign companies are listed, revealing deep systemic issues behind this phenomenon.

Forum host and co-founder of Lee Chi International Law Firm, Cai Yuling, raises a key question: “Under what regulatory mechanism could STOs become a catalyst to attract foreign companies to raise funds in Taiwan?”

Qian Di Xiong further admits that although some foreigners have issued listings in Taiwan in the past, most had Taiwanese business backgrounds. Even with improved STO regulations, whether Taiwan can effectively attract overseas blockchain companies remains uncertain. The key constraint is: “Participation in STOs is limited to professional investors, so naturally, the number of participating investors will be very small.”

The Practical Significance of Yang Yueping’s Perspective

Yang Yueping’s criticism of “sticking to old ways” reflects not only a regulatory mindset problem but also Taiwan’s lag in the global financial innovation race. While the US attracts global capital with flexible and diverse issuance channels, Taiwan continues to build more regulatory barriers. Without fundamentally changing this approach, Taiwan will continue to lose opportunities brought by STOs, and this conservative regulatory logic will further restrict the development of the local innovation ecosystem. The necessity of reform is undeniable; the key question is whether the authorities have the courage to face it.