New digital exchange gets MAS nod for green asset trading

SINGAPORE (THE BUSINESS TIMES) – A new kid on the block is riding on the growing popularity of digital exchanges for asset-backed tokens – but with a green finance twist.

Singapore-based Cyberdyne Tech Exchange (CTX) will soon introduce a platform to enable trading of green assets, such as solar or wind farms and electric-vehicle infrastructure in tokenised form.

On its platform, set to launch in July, issuers and investors will be required to disclose their carbon footprint.

The co-founder and executive chairman of the exchange, Bo Bai, told The Business Times that CTX received its capital markets licence from the Monetary Authority of Singapore (MAS) “a few days ago”. Last December, CTX was granted in-principle approval for a Recognised Market Operator licence and an exemption from licensing under the Payment Services Act.

Prospective issuers on its exchange include a solar developer in China as well as an art dealer in Europe.

Dr Bai, formerly from private equity firm Warburg Pincus, told BT in an interview: “Part of the fundamental rationale for CTX is that there’s a lot of capital, internationally, waiting to be channelled towards achieving both financial returns and ESG (environmental, social and governance) impact.”

The Global Sustainable Investment Alliance estimated in 2019 that at least U$31 trillion in funds were then held in sustainable or green investments.

Dr Bai added: “One way to do that is investing in a private equity fund that pursues such a strategy, but another way is to come to CTX and purchase tokens backed by green assets with a certified economic value and certified carbon footage.”

Tokenisation refers to the practice of slicing real assets – such as real estate, infrastructure, equity, and art – into fractions of ownership via a blockchain. This boosts trading liquidity and price discovery, while reducing barriers to investment, because a wider range of investors can now buy into the tokens with smaller-sized investment tickets.

Other digital exchanges in Singapore that have pursued a similar approach include DBS’ Digital Exchange and the Temasek-backed iSTOX.

Like these two digital exchanges, CTX will be available only to accredited and institutional investors when launched, Dr Bai said.

MAS defines accredited investors as individuals in Singapore who have an annual income in the preceding 12 months of not less than $300,000. Individuals can also qualify as accredited investors in the city-state if their net financial assets exceed $1 million, or if their net personal assets are more than $2 million and the net equity of their primary residence is no more than $1 million.

CTX will tap the expertise of international testing, certification and inspection companies such as DNV and Bureau Veritas to add the green label to its assets. Investors’ carbon footprints will also be tracked, Dr Bai said, adding that such disclosure is made more efficient via blockchain technology.

“All we are doing in our ledger is… to create a quantified and certified carbon footprint for each investor. This is the beauty of the digital assets exchange that we’re trying to pursue, which will be harder to do on the traditional exchanges.”

Dr Bai added that it will be more challenging for traditional, established exchanges to pull this off also because they already have a huge volume of assets on their platform.

“Think about it, if you are SGX (Singapore Exchange) or the Hong Kong Stock Exchange, if you want to do this today, what happens to the trillions of dollars that are being traded there? (By contrast) we are able to do this by starting from scratch and writing the rules (that) require the exposure and disclosure,” he said.

He also started Asia Green Fund, a green-impact private equity firm with offices in Beijing, Shanghai and Chicago.

CTX’s co-founders include Mr Gabriel Wong, a Singaporean and former Citi investment banker, and Ms Lily Hong, a Chinese national chief executive at a data security technology service provider.

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