Singapore-based cryptocurrency exchange Kryptos-X has secured $1 million in seed funding from ASX-listed Fatfish Internet Group. The new exchange is founded and led by Tony Mackay, the Australian entrepreneur behind Chi-X Global, a network of alternative stock trading platforms.
This investment will be funded by the use of existing cash reserves as well as the proposed listing of its venture builder’s asset portfolio on NASDAQ First North exchange in Sweden, as well as possible future capital raising. Up to 40 per cent of investment proceeds will be spent on talent acquisitions, with another 40 per cent for software development.The remaining 20 per cent will cover incidental setup costs.
Mackay and his management team chose to headquarter the startup in Singapore due to what they term as the city-state’s “well-regulated environment”, with Kryptos-X being established as an electronic marketplace for high-volume and high-frequency trading of bitcoin and other major virtual currencies online.
Kryptos-X will initially be offering services in Singapore for digital token offerings – also know as initial coin offerings (ICOs) – with expansion into other jurisdictions expected in the future. In a statement, Fatfish said, “The electronic marketplace will deal exclusively with blockchain technology-based digital tokens and cryptocurrencies.”
The cryptocurrency exchange space in Singapore has several players, such as Coinhako, FYB-SG, Luno, and international exchanges Quoine and Coinbase, which is accessible in the city-state. Earlier this year, Coinbase raised a $100 million Series D round at a valuation of $1 billion.
The investment will also see Mackay appointed a Non-Executive Director to Fatfish to advise and assist in developing further applications of blockchain and cryptocurrency technology.
Additionally, the investment will see Fatfish and Mackay enter into a joint venture (JV) arrangement, with Fatfish being issued with preference shares in the capital of the holding company which will own and operate the electronic exchange and marketplace. Fatfish’s interest in the exchange will amount to 27 per cent of the total voting shares on issue and granted the right to appoint two directors to the board of Kryptos-X.
The Monetary Authority of Singapore (MAS) has recently clarified that in the domain of digital token sales or ICOs, which sees enterprises issue their own cryptocurrencies to raise funds, those digital tokens which it determines possess characteristics of securities products fall under the remit of the city-state’s Securities and Futures Act (SFA).
In its stock exchange filing, Fatfish clarified that the operations of the Kryptos-X electronic marketplace will initially be based in Singapore and open to Singapore citizens and residents, with a growth strategy aimed at expanding into “other jurisdictions where the regulatory frameworks permit the trading of cryptocurrencies online”.
Recent data indicates that after the US and Switzerland, the city-state is the third largest centre for ICOs worldwide and has emerged as the Asian hub for ICOs.
This will see the electronic marketplace “deal exclusively with blockchain technology-based digital tokens and cryptocurrencies that do not carry features of securities nor Collective Investment Schemes (CIS) in accordance with the definitions in Singapore’s Securities and Futures Act”, being in compliance with the latest regulations issued by the MAS with regards to digital token offerings.
However, in the future it may engage in token offerings that qualify as securities and could partner with another Fatfish portfolio company, SmartFunding, which holds a capital market services license; a business partnership with its associated company would permit it to trade such tokens under Singapore law.