The Financial Supervisory Commission (FSC) of Taiwan today approved the application of Yongfeng Financial Securities to issue “stock gift cards.” This financial technology innovation experiment will last for one year, commencing within three months of the FSC’s approval, and must be launched by the end of May. Recipients of the gift cards can purchase from a selection of 241 stocks, including Taiwanese stocks and ETFs.
(Background: Is the FSC operating in a black box? The public hearing on the cryptocurrency special law was “announced in the morning and held in the afternoon,” according to Peng Jinlong: Taiwan’s regulation is at the forefront of the world.)
(Additional background: The FSC states that VASP operators in Taiwan must apply for registration by March 31; those who fail to complete this may face a maximum fine of NT$50 million for a two-year closure. Is P2P trading entirely illegal?)
Today (27th), the FSC announced the approval of Yongfeng Financial Securities’ application to issue “stock gift cards,” marking the tenth case of financial technology innovation approved by the FSC. The experimental period is set for one year, and since it does not involve legislative amendments, the experiment can be launched immediately after its completion. Yongfeng Financial Securities must initiate the experiment by the end of May this year.
Stock gift cards can be used to purchase 241 Taiwanese stock targets.
Hu Zehua, Director of the FSC’s Innovation Division, stated that this experimental project will see Yongfeng Financial Securities issue and sell stock gift cards in electronic form, allowing purchasers to use them for themselves or gift them to others. Holders of the stock gift cards can log into Yongfeng Financial Securities’ electronic platform and input the redemption serial number to convert the face value of the gift card into available funds for stock trading. (Currently, the stock gift card can only be used to purchase from 241 Taiwanese stock targets offered by Yongfeng Financial Securities.)
Hu Zehua pointed out that there are six denominations of stock gift cards: NT$100, NT$300, NT$500, NT$1,000, NT$3,000, and NT$5,000. These can primarily be used to pay for stock settlement fees, transaction fees, and trading taxes. Each individual can purchase a maximum of NT$250,000 worth of stock gift cards. If there is a balance left after purchasing stocks, it can be kept in Yongfeng Financial Securities’ settlement account and can be converted to cash if not used.
To purchase stock gift cards, one must be a client of Yongfeng Financial Securities, and the person using the card must also be a client. Purchasers can buy directly online from Yongfeng Financial Securities, and corporate clients are also eligible. Yongfeng Financial Securities must conduct customer due diligence (KYC) on the purchasers. The stock gift card can only be used to buy from the 241 Taiwanese stocks and ETFs available on the Fengcun Stock APP owned by Yongfeng Financial Securities.
If the stock gift card is not redeemed, the amount will be refunded to the purchaser. The stock gift card has no expiration date, but the experiment has a one-year timeframe, with an estimated scale of NT$100 million. Yongfeng Financial Securities anticipates that the number of purchasers could reach 35,000, and the number of redemptions could total 31,500.
Hu Zehua mentioned that no securities firm in Taiwan has previously issued stock gift cards, making this case innovative. It has the potential to attract individuals who have no prior investment experience, providing them opportunities to engage with and learn about investment and financial management. For Yongfeng Financial Securities, this not only creates a new source of customer acquisition but also allows more young people to enter the capital market through stock gift cards.
Future integration with blockchain?
If this product gains popularity among consumers, there may also be considerations for integrating stock gift cards with blockchain technology. Utilizing the immutable characteristics of blockchain could enhance transaction transparency and security. Through blockchain, the processes of issuing, purchasing, redeeming, and returning stock gift cards can all be recorded on a decentralized ledger, ensuring that every transaction is traceable and tamper-proof.
Additionally, leveraging blockchain technology could allow stock gift cards to become tradable tokenized assets, enabling cardholders to transfer or trade gift cards freely on-chain, thus enhancing liquidity. It could even be combined with other financial products, for example, serving as collateral for loans, further improving the efficiency of capital utilization.
