Security Token Market Industry Interviews— Darius Liu COO & Co-Founder of iSTOX
It comes with great pleasure to share with all of you our first-ever industry interview publication!
We had the honor to interview Darius Liu, the COO, and Co-Founder of iSTOX — the all-in-one security token exchange platform based out of Singapore.
One of our key duties at Security Token Market is to educate and spread positive awareness on all areas relating to security tokens. When we first launched STM, we identified a need in the market to help eradicate the negative connotation associated with blockchain and cryptocurrency-related firms. Since then, we've been doing everything we can to expunge it. We believe we have helped move the industry in the right direction; however, we still have a long way to go, which is why we decided to expand our repertoire and give our readers a first-hand look at what's happening on the inside of some the most legitimate players in the industry.
A key proponent of the success of the security token industry is gaining investors' trust back.
Security tokens are legally binding asset-backed tokens that provide ownership of assets or rights to assets to investors, which could include equity, dividends, profit-sharing, etc. These assets have had the opportunity to be exchanged in a cumbersome secondary sale process in traditional markets, but have never experienced the upgrade in the digital world. With smart contract design, digital ownership, and programmatic settlement, investors can quickly and cost-effectively buy and sell ownership in investment opportunities like never before.
That's why we took the time to interview iSTOX — an innovative company compliantly following guidelines that Singapore has drawn up to operate a successful business. In 2019, iSTOX entered into the Monetary Authority of Singapore's Sandbox to test their technology before going live. They were able to gain the MAS's trust in a live environment with issuers and investors while co-creating a regulatory environment together with MAS. Due to the success of the program, they have since 'graduated' from the MAS Sandbox and have a fully functional exchange with live-trading assets.
iSTOX is a future-ready capital markets platform set to usher in a new era for capital fundraising and investment. Through the use of Digitized Security Offerings, iSTOX offers a more innovative, flexible, inclusive, and efficient system for an emerging generation of investors and issuers. As part of its mission, iSTOX seeks to enable all users to transact precisely as and how they like and extends capital markets access to a wider segment of the community. iSTOX is owned by ICHX.
Let's dive into the interview:
1. Now that you’ve graduated from the MAS Regulatory Sandbox, what do you envision success looks like for iSTOX over the next 12 months?
Our long-term vision is to become the market leader for digitised securities not just in Singapore but worldwide. We strongly believe that digitised securities will be the future of investing and we see iSTOX as a key player in that system.
In terms of more immediate goals, we intend to have proven use cases that apply the concept of digitised securities to a wide variety of asset classes, including funds, bonds, equity-linked products and more. On the business side, we intend — and are already in the process of — onboarding a good mix of reputable issuers and a healthy pool of investors on our platform.
2. You have done a great job developing your tech and earning proper regulatory approval by following the rules and being patient. When should the public expect to see a finished product with active trading?
We’re already there. We hosted our first live trades on our secondary market in November of last year while we were still in MAS’s regulatory sandbox, making us a pioneer as an integrated issuance, custody and trading platform. In more recent milestones, we just hosted first fund issuance just this past month. We’re very proud to say it raised over S$10 million despite the ongoing market turmoil caused by the COVID-19 pandemic.
3. What important aspects did you learn while participating in the MAS regulatory sandbox that you will implement into your current business processes/strategies?
The concept of digitized securities, as well as the whole capital market end-to-end infrastructure layer built on DLT is a new concept, both in terms of technology and operating model. The sandbox has been useful for iSTOX to start operating in a ‘live’ environment with real issuers and investors, while simultaneously co-creating the regulatory environment together with MAS. This gave assurance to us, MAS and market participants that the iSTOX platform is stable and secure.
One other key lesson. Don’t underestimate the complexity of running an integrated end-to-end platform in a regulated environment. We have managed to pull together an extraordinary team and create all the processes needed to operate smoothly while remaining compliant. This required many factors to come together. It was not easy and we are proud to have accomplished it.
4. What excites you most about the security token industry?
We see digitised securities as the future of investing. When executed correctly and coupled with the right business model and regulatory environment, the security token industry opens up a world of possibility in terms of transparency, opportunity and growth. We are particularly excited by the possibilities of providing greater access to investment opportunities that have traditionally been out of reach to all but the most connected and wealthy.
5. What type of assets do you plan on listing on your platform? Will you focus on a specific asset class?
We have shortlisted some very exciting opportunities for the next 12 months, including a range of debt, fund and equity-linked issuances across a range of sectors, such as real estate, entertainment,
and lifestyle. From the very beginning, we’ve built our platform to support a wide variety of issuance structures.
6. Are you going to have investment offerings available to non-accredited investors?
We have no immediate plans to expand service to retail investors but we certainly aren’t ruling this out for the future.
7. Do you agree that the future of security tokens is a global phenomenon? Will you work with American and European platforms, issuers, and investors?
We definitely feel that investors need more access, transparency and efficiency worldwide. We currently work with a variety of ecosystem partners across the APAC region, including Thailand’s Phatra, Japan’s Tokai, and South Korea’s Hanwha, to expand our reach. Likewise, our platform is now open to accredited and institutional investors from all over the world (except the US).
8. As a leader in the Asian capital markets for security tokens — what competitive advantages will you have to utilize in order to stay the leader for years to come?
We have a head start in providing issuance, custody and trading in a regulated environment. We also have a very strong team and a highly reputable shareholder base with strategic synergies to drive growth. Even amid the ongoing COVID-19 pandemic and the market turmoil that has come along with it, we are continuing to relentlessly build our issuer pipeline and investor base.
Finally, the fact that we offer integrated issuance, custody and trading on the same platform, is something very few other platforms can match.
9. What is your main source of deal flow and how many clients do you have in your pipeline?
We are not able to disclose information on our clients but most are from Singapore, APAC and Europe. iSTOX is currently open to investors globally (excluding US citizens).
10. What are the listing fees/requirements for an issuer to list on your platform?
High standards of governance underpin all that we do at iSTOX, including our review process for listing applications. First, our experienced Listing Team reviews all applications to ensure that issuers and issuances meet the minimum requirements prescribed in the listing rules. After that, our Listing Committee evaluates offering applications and ensures they meet iSTOX’s requirements.
We charge a listing fee of SGD $10,000 when an issuer is admitted to iSTOX and a new digitised securities issuance project is launched. For more details on listing fees, visit: https://istox.zendesk.com/hc/en-us/articles/360044006154-What-fees-does-iSTOX-charge-issuers-
11. How can an interested issuer reach out to you to apply to list on your platform?
Companies can submit their application online to kickstart a pre-consultation with our Listing Team. To find out more about the process, contact us at firstname.lastname@example.org.
Thank you to iSTOX for participating in our first-ever interview series. We had a pleasure interviewing Darius Liu and are excited to witness their successes in the coming years.
Feel free to check them out at https://istox.com/ and follow them on Twitter and Medium!