Exclusive Interview with Henry Zhang, Founder & CEO, DigiFT: “By merging the liquidity of crypto and the stability of TradFi assets like the US Treasuries, we were able to deliver on the principles of treasury management on-chain”.

TDB: What significant value is DigiFT seeking to unlock for RWA-focused portfolio companies through the strategic partnership with HashKey Capital?

Henry Zhang, CEO & Founder at DigiFT: Our main objective in forming this partnership with HashKey is to unlock access to regulatory-compliant on-chain RWA for HashKey’s over 200 portfolio companies. As an institutional asset manager in the Web3 space, we also wanted to leverage our proven track record of satisfying the highest level of security standards. Through this partnership we aim to lay the groundwork for universally accepted standards across the industry, encouraging the widespread adoption of regulatory-focused digital asset management practices. Ultimately, the goal would be to be at the forefront of shaping the future where safety, integrity, and regulatory compliance stand as the cornerstone principles, setting the definitive standards for the entire financial ecosystem. This is no exception to the intersection of mainstream finance and digital assets, and we are paving the way forward by collaborating with like-minded partners.

TDB: How will these regulatory compliant on-chain offerings facilitate corporate treasurers in optimising their working capital and liquidity?

Henry Zhang: Whether on-chain or off-chain, the principles of treasury management remain the same across diverse assets — generating relatively stable returns while optimising working capital and liquidity, as well as resisting any forms of risks.

The only difference lies in the type of assets that form your portfolio, i.e. types of investment offerings and assets you invest in. From the early days, we recognized that there was a scarcity of compliant and secure digital asset financial products in the market. This is where we saw the opportunity to build high-integrity and compliant on-chain real-world assets (RWA) investment offerings, bridging the best of both worlds.

By merging the liquidity of crypto and the stability of TradFi assets like the US Treasuries, we were able to deliver on the principles of treasury management on-chain, while unlocking new pathways to optimise investment offerings available in the market. For illustration, last year alone, DigiFT launched the DigiFT U.S. Treasury Token (DUST), the first fully regulatory-compliant U.S. Treasury token issued on a public blockchain. DUST offers accredited and institutional investors an on-chain channel to invest in U.S. Treasuries with the physical U.S. Treasuries custodised with a licensed broker-custodian in Singapore.

TDB: Overall, what has been the market response to date of DigiFT’s RWA investment offerings?

Henry Zhang: DigiFT’s RWA investment offerings provide accredited and institutional investors with an on-chain channel to invest in fixed-income products, custodied with a licensed broker-custodian. With these offerings, we’ve seen positive responses from both traditional and crypto-native investors so far, most notably from our trademark product, DUST.

This signalled to us that there is strong demand for these types of products, particularly among Web3 investors, understandably so given the need to manage treasury funds.  For them, considering the high volatility of crypto assets, they prefer to use the funds earmarked for corporate planning to purchase US treasuries. Addressing these demands, DUST was well-positioned to allow these investors to safely and conveniently purchase US treasuries through stablecoins such as USDC in a one-stop manner, leading to the investors’ receptiveness to our flagship offering.

TDB: How do you envision capital market infrastructure for RWAs to evolve given competing and complex regulatory frameworks present across different jurisdictions?

Henry Zhang:  Given the strong interest in RWA, I foresee an effort to harmonise regulatory and infrastructural frameworks to take centre stage this year and beyond. I say this because we share the same goal and have made it our mission since our founding to help pave the way to build the next generation of capital markets.

To attain this goal, first, we’ll need to provide opportunities for regulators from various jurisdictions to come together and establish common principles and standards for RWAs.  This must involve discussions and agreements to create a consistent framework that accommodates tokenized assets within existing regulatory structures.

This leads me to my next point on coherent innovation. While regulators familiarise themselves with the Web3 innovations and work on establishing guidelines, the industry must develop advanced compliance tools and solutions, such as smart contracts with embedded regulatory requirements to streamline the adherence to different regulatory frameworks. During this endeavour, setting a global standard and framework for KYC and AML that can adapt to the different jurisdictions’ regulatory requirements must also be a priority especially as the cross-border transfer of assets comes into play in the intersection of Web2 and Web3 financial landscape.

Finally, I believe that the RWA tokenisation is here to stay and education is essential. As RWAs continue to evolve, regulators, market participants, and the public must be informed of the benefits and risks associated with these assets. This will allow for informed decision-making and the formulation of policies that will be able to maintain a balance between protection and innovation.

I envision the evaluation of the capital market infrastructure to be a combination of different market players — private and public, to solve the regulatory, legal, compliance, business model, and tech aspects of the industry. It will be a long but steady journey and DigiFT is committed to playing an important role until we reach our destination.

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