This global first initiative led by InvestaX, UBS, State Street, and CMS jointly explored the
potential of tokenisation of the Singapore VCC structure (Project e-VCC). PwC Singapore
provided VCC regulatory and tax advisory support for Project e-VCC.
Singapore, September 30, 2021
InvestaX today announced the outcome of Project e-VCC, which involved examining the
technological, legal, and practical feasibility of tokenising the Singapore Variable Capital
Company using a blockchain native structure. Through this proof-of-concept, industry
participants were able to determine the lifecycle and workflow processes for efficiencies gained
using an e-VCC by the relevant stakeholders (i.e. fund manager, fund administrator and
investors), and the key considerations for potential tradability of such e-VCC securities on
exchanges like InvestaX.
The project also explored VCC fund shares issued directly on either a permissionless/public
blockchain or a permissioned/private blockchain. It also compared the benefits of a blockchainnative
security token design (“one-tier”) as opposed to a tokenised security (“two-tier”) design.
Globally recognised UBS, State Street, PwC Singapore and CMS brought together practical
industry insights across the fund value chain, and in particular, where the use of Distributed
Ledger Technologies (DLT) could enable new market opportunities and operating models. The
Tezos Foundation and Hashstacs Pte Ltd (STACS) provided support as public and private
blockchain protocol providers, respectively, for the PoC.
InvestaX was awarded the PoC grant in September 2020, which provides funding support for
experimentation, development and dissemination of nascent innovative technologies in the
financial services sector. The PoC grant is part of the Financial Sector Technology and Innovation
(FSTI) scheme under the Financial Sector Development Fund administered by the Monetary
Authority of Singapore (MAS).
InvestaX is a leading digital securities investment and trading platform licensed by the MAS for
offering end-to-end solutions for the issuance, trading, and custody of digital securities for real
estate, private equity and other alternative investments. InvestaX is an early pioneer in the use
of blockchain technologies, and works with both issuers as well as investors to use DLT to develop
leading technology-driven investment vehicles and products to reduce costs, increase efficiencies
and transparency, remove friction, and facilitate secondary market trading in private capital
markets.
InvestaX’s CEO, Julian Kwan, said: “We are thrilled to have collaborated with UBS, State Street,
CMS Holborn Asia, PwC Singapore as well as our blockchain partners Tezos and STACS on this
groundbreaking initiative to bring efficiencies to the fund investment and management industry.
These funds in the real estate, private equity, and venture capital world, typically suffer from a
lack of liquidity, high barriers to entry, and are burdened with paper-based processes that add to
the costs of this competitive industry. By tokenising the VCC, we hope to support Singapore’s
ambition of becoming the world’s fund management center as well as the hub for capital markets
innovations.”
Thomas Kaegi, Head Asset Management, Singapore & Southeast Asia at UBS Asset Management,
said: “UBS is always seeking to provide the best service to our clients, which increasingly is
enabled by digital innovation. We are grateful for the opportunity to be part of this proof of
concept exploration, through the MAS FSTI program, to investigate the application of distributed
ledger technologies to funds and private markets for Singapore”
Mostapha Tahiri, Chief Executive Officer, Asia Pacific, State Street, said: “We are excited to
contribute our knowledge and experience in fund administration operations in Singapore and
worldwide to be part of this innovative proof of concept. State Street Digital will extend our two
decades of investment servicing experience to institutional investors in Singapore to the digital
assets world. We look forward to working innovatively with market participants and regulators
in Singapore to create new opportunities and efficient market models for VCCs by leveraging
novel technology, such as distributed ledger technology (DLT).”
The PoC determined that in a one-tier approach, record keeping of fund interests, traditionally
done by a transfer agent, can now be executed via DLT.
Armin Choksey, Asia Pacific Asset and Wealth Management Market Research Centre Leader, PwC
Singapore: “It has been a fantastic opportunity and an eye-opener to go through the various
intricacies of tokenised VCC. One can’t assume it to be a straightforward procedure. This POC has
helped identify the areas which must be considered at the time of launch as well as operating
the tokens. I believe it will have long term benefits for the industry in this area.”
Matt Nortcliff, Partner and Head of Funds – APAC at law firm CMS: “This is a timely and important
project and we were delighted that InvestaX invited us to contribute our funds, tech and VCC
expertise to the POC. With the ever increasing pace of digital disruption, the law often has to play
catch-up; this is both a challenge and an opportunity for Singapore. Projects such as this POC are
tremendously important in demonstrating that embracing and championing tokenised fund
structures can be a positive step for Singapore and the asset management industry at large.”
Julian Low, Director of Business Development, South East Asia at TZ APAC, said: “Singapore has
always been at the forefront of fintech innovation, and with this project, it continues to
strengthen its position as a leader in global asset management. We are grateful to be a part of
this POC project, as it serves as a testament to the revolutionary potential of distributed ledger
technologies (DLT). Now more than ever, enterprises, corporate brands, and governments want
to know how to leverage the transformational power of blockchain. Through our 360 degree
support system, we want to create meaningful partnerships in the Asia Pacific region and
champion digital disruption.”
Benjamin Soh, Managing Director at STACS, said: “As a leading fintech firm in Singapore, STACS
plays a key role in unlocking value for the financial industry via our live industry-wide DLT
platform for Asset and Wealth Management, End-to-End Digital Securities, and Enhanced ESG
Finance. This is a meaningful project and STACS is thrilled to be a technology partner of InvestaX
and various partners in the VCC industry, to contribute our DLT solution expertise in ensuring the
project’s practicality, scalability, and interoperability.”
Project e-VCC also led to the conclusion that there is nothing explicit in Singapore’s existing laws
prohibiting issuance of blockchain-native securities. Such securities would come under the
purview of digital tokens that constitute capital market products and be regulated under the
Securities and Futures Act. However, the potential application of stamp duty was identified as a
hurdle which must be addressed in order to enable secondary trading of e-VCC shares.
