CapBridge taps blockchain for its private exchange platform

PRIVATE securities exchange CapBridge 1exchange (1X) will deploy blockchain, or distributed ledger technology (DLT), for the trading of private company shares listed on its platform, and to register and track investor shareholdings, CapBridge said in a media release on Tuesday.

Over the next few months, the Singapore-based exchange will introduce its first set of DLT-represented listed private securities issued by growth companies.

The Ethereum mainnet, which has over 60 million users, has been selected as the distributed ledger for 1X. Being built on the global public Ethereum network allows 1X to potentially easily interconnect with other DLT-based exchanges, CapBridge said.

This would create a common and enlarged global liquidity pool while also allowing investors to further diversify, it added.

The initiative was developed in partnership with blockchain technology company ConsenSys and will be implemented together with trust administrator Equiom Trust Services.

By creating digital representations and registering these private securities via smart contracts on the public Ethereum network, a trustee such as Equiom Trust can maintain an online ledger. This online ledger will contain a record of all share transactions on the 1X platform.

All transactions will be recorded immutably on the distributed ledger. Data cannot be changed or deleted once ownership data is registered in the smart contracts.

Choo Haiping, CEO of 1X, said DLT-enabled shareholding registration will allow investors to independently verify and validate their shareholdings in real time without the manual process of going through an exchange or a trust administrator.

"The immutable nature of DLT provides the assurance of accuracy in recording and verifying both investor identity and the associated shareholdings", he added.

In the near future, 1X will explore the deployment of smart contracts that support compliance and corporate actions, such as incorporating Know-Your-Client status and automated dividend issuance.