After nearly a decade in business InvestaX still exudes energy and a passion for change

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The blockchain-based investment and trading platform, InvestaX, can trace  its origins to the Initial Coin Offerings (ICOs) boom of 2017-18, and its founders  have shed none of the zeal for revolutionary reform of financial markets  that characterised that period. They quickly recognized the transformative potential of the underlying technology—smart contracts and blockchains, which led them to overhaul their Web2 platform, replacing it with a cutting-edge blockchain-enabled system, fully equipped for the tokenisation of real-world assets (RWAs). However, a passion for making tokenisation happen does not mean InvestaX is an outsider. It has secured Capital  Markets Services (CMS) and Recognised Market Operator (RMO) licences from the Monetary Authority of Singapore (MAS), and  also collaborates  with other regulated and licensed token exchanges, broker-dealers,  investment firms and  custodians, globally. Now, InvestaX has identified privately managed assets as where centralised traditional financial institutions (TradFi), with their preference for closed networks and high levels of intermediation, are most at risk of being bypassed and outpaced by start-ups that embrace blockchain technology, digitally native assets, open networks and direct access by investors. The company has launched a tokenisation Software as a Service (SaaS) platform to facilitate the issuance, trading and custody of RWAs. Future of Finance Co-founder Dominic Hobson spoke to Julian Kwan and Alice Chen, co-founders of InvestaX. (1)

Hobson: Who owns your organisation, what are their expectations and how do they support your strategy?

Kwan: We are backed by a good mix of traditional finance (Tradfi) and decentralised finance (DeFi) investors, including several publicly listed companies, Coinbase Global, UOB Venture Management, Signum Capital Management, 500 Startups, and several prominent individual investors such as Balaji Srinivasan (ex-Chief Technology Officer (CTO) of Coinbase) and the co-founders of PropertyGuru, Stephen Melhuish and Jani Rautiainen.

Hobson: Is it accurate to describe your organisation as an “exchange” where buyers meet sellers on your platform, as opposed to, say, investors meeting issuers as principal?

Kwan: InvestaX operates an exchange but also acts as the platform from which primary issuances can be launched. Essentially, we have built this one-stop shop tokenisation solution that enables the issuance, trading, and custody of Real World Asset (RWA) tokens, also known as security tokens, for all types of private market assets in a SaaS model, but we also hold the requisite licences to be able to distribute and trade these tokens.

Hobson: You have explained that your focus is on both primary market capital-raising and secondary market trading. What synergies do you see between the primary and the secondary markets?

Chen: Every issuer of a RWA token would like to offer their investors some form of secondary trading, and that is one of the strongest value propositions of tokenised RWAs recorded on the blockchain over traditional RWAs recorded on paper. The synergy between primary and secondary markets is crucial because it creates a more liquid and dynamic ecosystem. In the primary market, capital is raised, and RWAs are tokenised, but substantial additional value is unlocked in the secondary market where these tokens can be traded freely. This liquidity provides investors with the flexibility to enter and exit positions more easily, which, in turn, attracts more capital to the primary market. 

Hobson: Exactly what do InvestaX’s licences entitle it to do in terms of instruments, activities and  accredited investors?

Chen: InvestaX’s licences allow it to facilitate the primary offering and issuance of RWA tokens, as a broker-dealer. InvestaX is also licensed to operate a secondary exchange for RWA tokens, and it does so via a matching engine and order book model. While InvestaX caters to accredited and institutional investors, its sister company, IX Swap, focuses on retail investors. IX Swap operates the world’s first licensed decentralised exchange for RWA tokens, powered by liquidity pools and automated market makers (AMM), and holds a Digital Assets and Registered Exchanges Act licence from the Securities Commission of The Bahamas, which allows it to  launch primary issuances of digital assets, operate a digital asset exchange, digital assets, and more. Both platforms are generally available to investors worldwide, subject to sanctions restrictions and the applicable laws of any particular jurisdiction.

 Hobson: Are you seeking additional operating licences?

Chen: Not currently. Under both platforms, we are proud to say that we have the full suite of licences needed to issue, trade and custody any tokenised RWA, for all types of investors. These licences, which have collectively taken us five long years to secure, are the biggest value-add we can bring to any and all clients in the RWA tokenisation space, because of how regulatory compliance lies at the heart of every RWA token project.

Hobson: Your blockchain network is “public” rather than “private” or “public permissioned.” What explains your choice?

Kwan: We are blockchain-agnostic but we see the value of public blockchains to be able to introduce interoperability, which is required to provide shared liquidity pools and the larger benefits of public protocol upgrades and improvements. Private networks fail to provide the connectivity to the Web3 ecosystem and all of the innovations and value there. Every digital asset that matters - Bitcoin, Ethereum, Stablecoins, altcoins (those other than Bitcoin (BTC) and Ether (ETH)), most RWA tokens, governance tokens for decentralised autonomous organisations (DAOs) are all on public blockchains and there would be no way to interact with them or any DeFi applications if you built your own universe on a private chain.  

Hobson: Which blockchain protocol do you use?

Kwan: BASE (Coinbase), Ethereum, Polygon, Klaytn (Kakao), Tezos, Algorand and Hedera Hashgraph are some of the protocols we work with. However, we are blockchain-agnostic and are always willing to add other suitable public protocols to our platforms. 

Hobson: Do you work with a particular technology vendor?

Kwan: We build and own all our own technology. We have an experienced and highly knowledgeable in-house technology team that specialises in Web3 development. This internal expertise allows us to maintain complete control over our platforms, ensuring they are secure, scalable, and tailored to the needs of our users. By developing everything in-house, we are able to stay at the forefront of blockchain innovation, quickly adapting to new trends and technologies while implementing features that align with our vision.

Hobson: In terms of the additional services you provide, issuance, trading, settlement, registration and custody are all provided on the public blockchain, which is unusual. What are the risks and advantages of providing all services on a public blockchain?

Chen: The primary advantage of using public blockchains for these services is the ability to leverage global  infrastructure that seamlessly connects to the broader digital asset ecosystem, including the powerful tools and innovations within the DeFi space. By operating on public blockchains, we also benefit from enhanced security features and protocol upgrades inherent in decentralised networks, such as immutability and consensus mechanisms, which help to reduce the risk of fraud and ensure the integrity of transactions. Further, the use of public chains allows for greater interoperability with other digital assets and platforms, which can foster innovation and open up new opportunities for our clients. As for risks, we do not see any major concerns that outweigh these benefits. Public blockchains have proven to be resilient and secure over time, and their open nature encourages continuous improvement and audit by a global community.

Hobson: How do transactions settle? Is it “atomically”? And how do you deal with the cash leg of settlement? Is it off-chain via the conventional banking system, cash on-chain in tokenised form, or by direct or indirect connections to central bank Real Time Griss Settlement systems (RTGSs)?

Chen: With InvestaX, investors can use fiat currency or Stablecoins to purchase RWA tokens, which typically involves having pre-funded accounts. On the IX Swap front, investors invest using Stablecoins from their self-custody digital wallets, and everything happens on chain. Our AMM is built on Ethereum, Polygon and BASE (all public protocols), and the swaps settle onchain using digital currencies and digital securities. Both setups are optimised for seamless and efficient transactions and settlement.

Hobson: Do your issuance services include offering or writing smart contracts?

Kwan: Yes, we write our own smart contracts in-house, which allows us to provide highly customised and secure solutions tailored to our platforms and clients’ needs. Our experienced Web3 development team creates smart contracts that manage everything from token issuance to managing the flow of funds, ensuring transparency and automation throughout the process. 

Hobson: Do you provide financial advisory services to issuers?

Chen: Yes, we do offer advisory services to issuers. Our advisory services are designed to guide clients through the entire investment lifecycle of their tokenised RWA. This includes strategic planning, structuring, documentation, regulatory compliance and marketing. We leverage our deep expertise in blockchain technology and financial markets to help issuers structure their RWA token offerings effectively, ensuring that they meet both legal requirements and market expectations. Our team also provides insights into market trends and investor preferences, helping issuers to position their offerings attractively in the market. Our goal is to ensure that our clients can launch their tokenised RWAs successfully and achieve their strategic objectives, all while mitigating risks and enhancing their overall market impact. 

 Hobson: You have described the type of issuers you seek as “global.” How are you reaching a global audience?

Kwan: We reach a global audience by leveraging our platforms’ established international investor base and employing a diverse range of strategies, including public relations, marketing campaigns, speaking engagements at major conferences, interactive ask-me-anything (AMA) sessions on social media and webinars. 

Hobson: The types of issuers you seek includes public companies, private companies, mutual funds, private equity funds and exchange-traded funds (ETFs). What explains your choice of targets?

Kwan: We are asset-agnostic and client-agnostic, meaning that we welcome issuers from diverse sectors and asset classes. We view tokenisation as simply a tool and back engine. You can tokenise almost anything that has value, whether it is financial instruments, public companies, private firms, mutual funds, private equity funds, ETFs, art, collectibles, real estate or luxury items. Our platforms are designed to accommodate a wide range of needs and asset types. Our focus is on providing a fast, cost-effective, and legally compliant environment for issuing RWA tokens, regardless of the type of asset or issuer.

Hobson: You have described liquidity as both “crucial” and “very important.” How does secondary market liquidity help primary market activity?

Chen: Secondary market liquidity plays a vital role in enhancing primary market activity by providing a dynamic and accessible trading environment for RWA tokens. IX Swap pioneered the world’s first automated market maker specifically designed for RWA tokens, which allows anyone holding RWA tokens to initiate a liquidity pool, which is game changing. Investors benefit from enhanced liquidity in the secondary market through the ability to exit their positions more easily and efficiently. IX Swap’s automated market maker for RWA tokens facilitates trading 24/7, without the need for the counterparty buyer or seller to be present at the other side of the trade at any given time. The availability of a secondary market also reduces the illiquidity discount which is the tendency for assets to be priced lower due to difficulty in selling them quickly. As a result, investors are more confident in their ability to liquidate their positions without significant price concessions, making the RWA tokens more attractive and increasing overall market participation.

Hobson: Are the additional services you provide – such as fractionalisation of assets, lowering  minimum subscriptions to funds, trading, direct market access (DMA), custody and staking - designed to appeal to a particular type of investor, such as retail investors? 

Chen: All these services are integral to our overall value proposition and are designed to cater to a broad spectrum of investors, including retail investors on the IX Swap side. Fractionalisation of assets allows investors to purchase smaller, more affordable portions of high-value assets, making it easier for individuals with varying levels of capital to participate. Lowering minimum subscriptions to funds also opens up opportunities for investors who might otherwise be excluded from high-entry barrier investments. Custody of RWA tokens on both platforms are provided through licensed custodians, ensuring secure storage at all times. Additionally, IX Swap offers staking which gives investors opportunities for earning rewards and also encourages appreciation due to reduced circulating supply. Together, these features create a more inclusive and accessible investment environment, aligning with our goal to serve a diverse investor base and democratise access to investment opportunities.

Hobson: Your choice of target asset classes (equities, funds, real estate, commodities), other real-world assets such as collectibles, structured products such as ETPs and structured derivatives for both retail and institutional investors is both global and comprehensive.  But which of these asset classes are you focused on in the short term? 

Kwan: In the short term, our focus is on start-ups, venture funds and other alternative investments. We see significant potential in these asset classes due to their dynamic and high-growth nature. Start-ups and venture funds, in particular, are crucial for driving innovation and scaling new technologies, which aligns perfectly with our mission to support cutting-edge financial products. These alternative investments often benefit from the flexibility and liquidity provided by tokenisation, making them ideal candidates for our platforms. By concentrating on these areas, we aim to capture the burgeoning opportunities within the alternative investment space, offering tailored solutions that address the specific needs of investors and issuers in these segments. This targeted approach allows us to build deeper expertise and create more impactful solutions, setting the stage for further expansion into other asset classes as we continue to grow.  At the same time, we know that diversification is key to managing investment risk, so we also offer tokenised private credit and soon to offer tokenised treasuries as part of our suite of offerings.

Hobson: You have explained that you are already enjoying profitable revenues, which is also unusual. What is the secret of your success?

Kwan: Our success can be attributed to several key factors.  We began our journey in Asia, where we were among the earliest and biggest believers in RWA.  I guess we are considered early pioneers in the RWA tokenisation space, with a number of world-first projects, including tokenising the Singapore Variable Capital Company fund structure in a blockchain native issuance (Project eVCC). We tokenised our own ESOP (DESOP) and pioneered onchain tokenised portfolios for VCs (OTPs).

Our dedication to this space is evident in the extensive efforts we undertook to obtain the  necessary licences. From day one, we chose to build on public blockchains, allowing us to leverage all the innovations being built on top of these protocols. Additionally, our team’s relentless work ethic and expertise have played a crucial role in our success. Despite having raised some of the least amount of venture funding compared to our peers, we have been able to attract and retain top talent, which I personally believe to be the best in the market. These factors combined—our early commitment, regulatory diligence, innovative approach, and exceptional team—have been instrumental in achieving profitable revenues and establishing our position as a leader in the industry.

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(1) See also the separate interview with Alice Chen at https://futureoffinance.biz/investax-founder-agrees-that-tokenisation-is-synonymous-with-institutional-defi/