iSTOX, a platform for issuing and trading blockchain security tokens and which is backed by the Singapore Exchange (SGX) and Heliconia Capital Management, a wholly owned subsidiary of Singapore state fund Temasek, has raised an undisclosed amount of Series A funding from Kiatnakin Phatra Financial Group (KKP), one of the largest Thai investment banks. While no terms or fine details about the deal are released to the public, it is understood that KKP is the only investor in the latest Series A funding round.
iSOTX is owned by ICHX Tech, a fintech infrastructure company specializing in blockchain and smart contract technology. It counts among its board members Chew Sutat, senior managing director of SGX, and Chua Kim Leng, former special advisor of the Monetary Authority of Singapore (MAS). In May of this year MAS, Singapore’s central bank, admitted the platform into a fintech regulatory sandbox.
For iSTOX’s seed round funding it had the investment and backing of both the Singapore Exchange and Heliconia Capital Management. While the sum of the seed round was also not disclosed, according to public filings the two investors contributed about US$730,000 each, for a total sum of US$1.43 million.
This time the funds raised from the Series A funding will be used to increase the user base of investors, issue tokens with a range of securities like bonds, structured products and stocks, and expand in the Asia region.
While the security token platform iSTOX incorporates blockchain and smart contract technology in its platform infrastructure, it is not a cryptocurrency exchange as all issuances will be bought and sold using fiat currency. It does not allow the trading of tokens for cryptocurrencies, and it will let companies offer security tokens in exchange for cash, though they will still need to adhere to the Singapore Securities and Futures Act. However, because iSTOX is operating in a fintech regulatory sandbox, they will be exempted from some of the requirements, like the need to submit a prospectus if the tokens are offered only to accredited investors and institutional investors. Only accredited investors and institutional investors are permitted to trade on the platform at launch.
President and CEO of Kiatnakin Bank, Aphinant Klewpatinond, in a statement said: “The digitization of securities will certainly be critical in reintermediating the value chain and offering solutions not yet available in conventional capital markets”.
iSTOX has the potential to be a gateway to private capital markets that are otherwise unavailable for the vast majority of investors. Chief strategy officer of iSTOX, Darius Liu, said: “Many investors these days are not getting the returns they want from the major public financial markets and are very interested in private market opportunities such as equity in series B start-ups, corporate debt, and hedge funds”.
Darius Liu further noted that the market for such securities right now lacks transparency and is highly fragmented, thus incurring high transaction fees and long settlement times. Only ultra-high networth individuals and those with the right connections can hope to effectively compete.
iSTOX hopes to change all that. The company says that its new blockchain platform grants all users equal access, informs them about opportunities, gets rid of many of the high costs and effectively opens private investment to accredited and institutional investors. Liu added: “By offering issuance, custody, and secondary market trading on one platform, iSTOX provides a one-stop shop for investors. This is important because if you lack any one of these, it costs you time and adds cost and complexity.”