Written by: Khairul Haqeem, Journalist, AOPG.
In a recent interview with Disruptive Tech Asia, Oi-Yee Choo, CEO of ADDX, detailed her path from working in banking at UBS Singapore to leading the charge in the private market exchange arena with ADDX.
“Prior to joining ADDX, I was Head of Investment Banking at UBS Singapore. In my time there, I saw trends that convinced me that the industry was ripe for transformative change – the rise of blockchain technology, and the shift in capital from public markets to private markets,” said Choo.
She saw great promise in ADDX’s work and knew that if they were able to leverage blockchain technology to assist individual investors in breaking into the private market, it would completely transform the investment industry and the capital markets.
“Working in a growth-stage start-up like ADDX is rewarding in many different ways. We are given a blank slate – we get to redefine the rules and reshape the capital markets. Every day I am driven by that sense of excitement you get when you are building something from scratch,” Choo added.
Winter for Crypto, Summer for Tokenised Securities
Choo emphasised the importance of differentiating between crypto and tokenised securities when asked about the negative connotation or notion in the region that the bubble will, sooner or later, collapse despite the fact that blockchain technology and crypto are gaining huge acceptance around the world.
Choo explained, “while they are both digital assets and are both applications of blockchain technology, the two are very different. Crypto is not backed by real-world assets and tends to be unregulated. Tokenised securities are backed by traditional financial assets – they are the digital representation of ownership in securities like equity, bonds and fund units. Tokenised securities leverage blockchain technology to make them more efficient to administer and to automate manual processes but the underlying asset is fully regulated. Tokenised securities are therefore insulated from a hypothetical crypto collapse.”
“In fact,” she said, “I take the perspective that a crypto winter is a blockchain summer since capital is compelled to look at blockchain ideas outside of crypto.”
Choo thinks that blockchain technology is altering the investment landscape for illiquid assets such as venture capital, private equity, hedge funds, private credit, and pre-IPO businesses.
“Blockchain technology enables secondary trading at scale and creates liquidity. The efficiency that comes with tokenisation allows for assets to be traded quickly, inexpensively and in small units. This gives investors not only access to deals but also the option of exiting early – before the investment deal matures fully. With an exit option, investors’ barriers to entry are thus lowered for traditionally illiquid assets such as venture capital, private equity, hedge funds and other private market investments,” said Choo.
Investing for the Masses: How Tokenised Securities are Changing the Game
Tokenised securities, in Choo’s opinion, are democratising the securities market by making digital assets (or security tokens) accessible to a broader variety of permitted individual and corporate investors, who may then employ a broader range of investing techniques.
“Tokenised securities are reducing the minimum investment size from USD $1 million or more, to as low as USD $5,000. That means private markets are no longer exclusive to institutional investors and billionaires. Imagine an investor with USD $2-5 million in investable financial assets – the “millionaire next door”, if you will. The fractional access they can get via tokenised securities will empower them to build a meaningful and diversified private markets portfolio to complement their existing public markets portfolio. This diversification reduces correlation among portfolio assets while enhancing the resilience and long-term returns of their investments as a whole,” asserted Choo.
Ethereum at the Helm
As for the technology behind ADDX, Choo revealed that ADDX is currently using the Ethereum blockchain for its smart contract deployment. “Ethereum is a decentralised, open-source blockchain platform that enables the creation of smart contracts and decentralised applications. Ethereum’s smart contract functionality allows for the automation of complex processes and the execution of agreements without the need for intermediaries. ADDX leverages this feature to automate the process of buying and selling tokenised securities on its platform, making it more efficient and cost-effective for investors,” Choo said.
On the contrary, the corporation isn’t settling for just one blockchain solution. Choo mentioned that ADDX is investigating and evaluating other blockchain solutions to guarantee that it remains at the forefront of technical developments in the industry. She emphasised the need of providing a safe and reliable platform for users at all times.
When asked about the future of ADDX and the private market exchange space, Choo said, “I see a bright future for tokenised securities and the democratisation of private market investing. With the advancements in technology and regulations, we will continue to see more and more individuals and institutions entering the private market space. ADDX is committed to making this process as seamless and accessible as possible for our users.”
It is evident that Oi-Yee Choo and the ADDX team have a well-defined goal for the future of private market investment and are working towards it. They are well on their way to transforming the sector with their usage of blockchain technology and dedication to democratising the area.