Home News Asia’s pioneer Digital Securities Offerings platform InvestaX announces the completion of PoC tokenisation of Singapore Variable Capital Companies, championed by veteran institutional firms.

Asia’s pioneer Digital Securities Offerings platform InvestaX announces the completion of PoC tokenisation of Singapore Variable Capital Companies, championed by veteran institutional firms.

by jcp

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.

 

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