New digital exchange gets MAS nod for green asset trading

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.

The platform, set to launch in July, will require issuers and investors to disclose their carbon footprint.

Co-founder and executive chairman Bo Bai said CTX received its capital markets licence from the Monetary Authority of Singapore a few days ago.

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

Dr Bai, formerly from private equity firm Warburg Pincus, said: "Part of the 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.

"One way to do that is by investing in a private equity fund that pursues such a strategy, but another 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 as a wider range of investors can now buy into the tokens with smaller-sized amounts.

Other digital exchanges here 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.

Accredited investors are defined as individuals with an annual income in the preceding 12 months of not less than $300,000. Individuals can also qualify 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 certification companies such as DNV and Bureau Veritas to add the green label to its assets. Investors' carbon footprints will also be tracked.

"All we are doing 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 said.

He added that it would be more challenging for traditional exchanges to pull this off as 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.

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