Disclaimer:
All information provided within this proposal is intended for use by Arbitrum only and is not intended for public use outside of Arbitrum’s network purposes. Information provided is for information purposes only.
DigiFT and/or its subsidiaries endeavour to ensure the accuracy and reliability of the information provided, but do not guarantee its accuracy and reliability and accept no liability (whether in tort or contract or otherwise) for any loss or damage arising from any inaccuracy or omission or from any decision, action or non-action based on or in reliance upon information contained in this website. All information contained in this website is FOR ARBITRUM’S USE ONLY.
DigiFT is proud to apply for the Arbitrum Treasury Diversification (STEP2). DigiFT will be submitting two separate applications. One for the UBS USD Money Market Fund Investment Token (uMINT) and the other for the Invesco Senior Secured Loan Strategy Token (iSNR).
DigiFT is the first regulated on-chain exchange, approved as a Recognized Market Operator with a Capital Markets Services license by the Monetary Authority of Singapore (MAS) since December 2023. DigiFT allows asset owners to issue blockchain-based security tokens and investors can trade with continuous liquidity via an Automated Market Maker (AMM).
At the moment, DigiFT’s smart contracts are on Ethereum and Arbitrum, and we are seeking partnership with leading Layer 2 ecosystem, Arbitrum, to better leverage efficiency of the underlying technology.
DigiFT are encouraged by the growing RWA ecosystem of Arbitrum and would like to support the RWArbitrum movement even further by involving the tokenized money market fund, uMINT, and tokenized senior loan strategy, iSNR. DigiFT believes that this will be advantageous to both Arbitrum’s and DigiFT’s ecosystems and would like to work beyond this proposal.
The proposal in this page focuses on iSNR.
Applicant information
Name: DigiFT Tech Singapore Pte Ltd
Address (Headquarters): 7 Straits View, #05-01 Marina One East Tower Singapore 018936
Country: Singapore
Website: https://www.digift.sg/index
Primary contact Name: Ryan Chen
Title: Head of Research and Innovation
Country: Singapore
Telegram: @ciz233
Email: ryan.chen@digift.com.sg
Key Information
About DigiFT
DigiFT is the first regulatory-compliant exchange for on-chain real-world assets to be licensed by the Monetary Authority of Singapore as a Recognized Market Operator and Capital Markets Services provider. DigiFT enables asset owners, particularly financial institutions, to issue blockchain-based security tokens that investors can trade with continuous liquidity using an Automated Market Maker (AMM).
Source: DigiFT Collaborates with Invesco on Tokenized Solution)
About Invesco
Invesco is a leading independent global investment management firm, founded in 1935. The company operates in over 20 countries, offering a diverse range of investment strategies across asset classes, investment styles, and geographies. As of January 31 2025, Invesco managed approximately USD 1.9 trillion in assets. Invesco is dedicated to delivering an investment experience that helps people get more out of life.
NYSE: IVZ;
Website: www.invesco.com.
About iSNR
iSNR is a tokenized structured note linked to the performance of an Invesco US Senior Loan Strategy, launched as a collaboration between Invesco’s investment management capabilities and DigiFT ‘s tokenization and on-chain distribution capabilities. This innovative financial product provides accredited and institutional investors with on-chain access to a $6.27 billion senior loan portfolio managed by Invesco. Designed to offer steady income while preserving capital, iSNR represents a significant advancement in the tokenization of real-world assets, combining traditional asset management expertise with the benefits of blockchain technology.
Source: DigiFT
Expected Yield: 7.35% YTD Return, As of 31 December 2024 (net of fees)
Expected Maturity: Perpetual (The note has a maturity date that the issuer rolls over to the next note, making the investment experience perpetual.)
Underlying asset
Due to compliance requirement, some of the underlying asset information will be sent via email.
Minimum/Maximum transaction size
Minimum in USD/USDC/USDT: 10,000 USD/USDC/USDT
Maximum in USD/USDC/USDT: N.A.
Current AUM for product
The AUM of the underlying fund of iSNR is USD6.27 billion as of 31 January 2025.
ISNR is a relatively new token launched on Arbitrum and Ethereum, with AUM 150K USD as of March 18th
Current AUM for issuer
Issuer of iSNR: Red Cedar, SPV of DigiFT. No other issuance.
Issuer of the underlying fund:
Invesco is a global leader in investment management with USD 1.9 trillion in assets under management, as of January 31 2025. Invesco Ltd. - Invesco Ltd. Announces January 31, 2025 Assets Under Management
Volume of transactions LTM (last twelve months)
Invesco iSNR: Newly launched
Source of first-loss capital
Not Applicable
Basics and background
1. How will this investment improve Arbitrum’s RWA ecosystem?
Cryptocurrencies are too volatile for treasury management which target stable and safe yields. As a regulated security token exchange, DigiFT is able to bring traditional capital markets onchain and let Arbitrum ecosystem get access to diversified high quality assets that are uncorrelated with cryptocurrencies, and meet various demand of traditional assets from the Arbitrum communities.
Adding Stability and Credibility to Arbitrum’s Treasury Reserve:
iSNR lowers the counterparty risk for Arbitrum.
Invesco is a leading independent global investment management firm, founded in 1935. The company operates in over 20 countries, offering a diverse range of investment strategies across asset classes, investment styles, and geographies. As of January 31 2025, Invesco managed approximately USD 1.9 trillion in assets. Invesco is committed to helping individual investors, financial professionals, and institutions achieve their financial objectives through a client-focused approach and a robust investment process.
Diversification of Assets:
DigiFT is grateful for the opportunity to provide Arbitrum the opportunity to diversify its holdings across both asset class and managers. Digital assets have developed substantially over the last ~10 years and have further room to mature. Diversified allocation to lower volatility assets is critical to ensure long term success. Our long-term investment and risk management experience in developed investment markets (TradFi) guides this core principle. We believe iSNR offers a unique opportunity for Arbitrum to benefit from Invesco’s experience and institutional approach in money market investment, and even brings diversified opportunities between Tradfi and Web3.
Building a next-generation security token exchange on tier-one layer 2:
DigiFT’s mission is to leverage Ethereum and Arbitrum’s security to build the next generation of capital markets with higher efficiency, more transparency, and less middle-layer cost. By deploying the DigiFT exchange on Arbitrum blockchain, Arbitrum communities can trade diversified capital market products directly on-chain with instant settlement.
2. Identify key management personnel and individual experience. Also include third parties utilized for managing assets and their qualifications.
Henry Zhang, Founder & Chief Executive Officer.Henry, a veteran banker with over two decades of experience, previously served as the Deputy CEO at Citibank China and held the position of Greater China CEO at East West Bank.
Linkedin
George Jin, Chief Operating Officer.George, a skilled product manager, with extensive operations experience, has amassed valuable experience working with global financial intuitions including Citibank and Bank of America.
Linkedin
Kevin Loo, Chief Executive Officer (HK). Kevin, a crypto-advocate since 2017, has over 20 years of experience in fixed income asset management at BNP, Pimco and Fidelity.
Linkedin
Amos Song, Chief Business Officer, Amos, our leader in business development and partnerships, brings over a decade of experience in the fields of private equity real estate and wealth management.
Linkedin
Fisher Fu, Chief Architect Officer. Fisher, our in-house expert in blockchain and smart contracts, formerly held the position of Exchange Architect at the Shenzhen Stock Exchange.
Cynthia Xi,Group Risk Officer. Cynthia, former Deputy CEO of Bocom International Holdings Ltd., 30 year working experience in capital market with affluent expertise in corporate finance and wealth management.
Linkedin
Chivy Chan,Chief Compliance Officer. Chivy, a compliance professional with over 12 years in the banking, securities and commodities brokerage and asset management at StoneX, Northern Trust, Haitong and HL Bank.
Linkedin
Ryan Chen, Head of Research and Innovation Ryan, a seasoned expert in the Web3 space, has been actively involved in and researching the industry since 2017, with a deep focus on blockchain infrastructure and decentralized finance. His past experience includes roles at Avalanche, Nervos Network, and iZUMi Finance.
Linkedin
3. Describe any previous work by the entity or its officers/key contributors similar to that requested. References are encouraged.
DigiFT had submitted a number of RFPs with regards to possible investments, including Arbitrum’s previous STEP (DMMF01), Ethena Reserve Fund (uMINT), and Sky’s Tokenization Grandprix (uMINT).
This is the first RFP for iSNR and we would like Arbitrum to be DigiFT’s pioneer investor in iSNR.
4. Has your entity or its officers/key contributors been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations? Please describe the circumstances if so.
DigiFT and/or its officers/key contributors have not been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations.
5. Describe any conflicts of interest for your entity and key personnel.
There are no conflicts of interest for DigiFT and its key personnel.
6. Insurance coverages, guarantees, and backstops Name of insurer or guarantor Per incident coverage Aggregate coverage 1.
Not Applicable
7. Historical tracking error in your proposed product, or similar to that being proposed Product 2024 2023 2022 2021
Not Applicable
8. Brief reason for above tracking error
Not Applicable
9. Please describe any experience your firm has in working with decentralized organizational structures
DigiFT brings institutional grade RWA to Web3, with Invesco as a strategic partner, making blockchain driven finance a reality, providing critical infrastructure for value exchange across new and mature investment ecosystems.
DigiFT is the first and only RWA exchange on Ethereum public blockchain with a Capital Market Services (CMS) License and is approved as a Recognized Market (RMO) Operator by MAS. With these licenses, DigiFT is approved to offer:
- Primary market issuance and broker-dealer services
- Secondary marketplace ‘wallet to wallet’ order-matching (via AMM, OTC or P2P), transfer agent and settlement services
- Accept fiat, stablecoins and cryptocurrencies for trading of RWA tokens
- Custody Services
DigiFT has been successfully granted authorisation to deploy a hybrid approach that combines DeFi technology and processes, offering decentralised ‘wallet to wallet’ RWA trading, while successfully configuring public chain permission standards (ERC-20) to meet the highest regulatory and compliance standards, acceptable to both UBS and the Singapore MAS. This well vetted combined approach allows DigiFT to confidently provide the required “Trust Anchor” bridge when delivering sustainable yield and value transfer between both DeFI and TradFI industries.
DigiFT has successfully listed over 12 tokens in the past 24 months, including a corporate debt note by Diners Club, single U.S. T-Bills, high-yield bank bonds and money market fund. As an on-chain exchange, DigiFT’s team also have experience working with DeFi protocols and decentralized organizations, such as payment channels, lending protocols and CeDeFi protocols.
10. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
DigiFT’s current TVL is at ~$14 million. TVL is not the sole factor of performance for DigiFT. DigiFT’s performance is also dependent on having a reliable ecosystem and stacking up Tier-1 partners while distributing Tier-1 assets. DigiFT offers to be a plug-n-play infrastructure, being the center of the DeFi and TradFi ecosystem. As of now our key Tier-1 AM partners include UBS and Invesco. Currently, DigiFT are in talks with more Tier-1 partners and plans to expand exponentially in terms of partnerships and TVL this year.
11. How many of these assets held are present on Arbitrum One, if any?
iSNR is on Arbitrum and Ethereum. DigiFT also launched tokenized T-bill on Arbitrum.
Plan design
1. Please describe your proposed product, including a description of the underlying assets and, if more than one asset, the proposed allocation among assets and general investment guidelines. Where appropriate, include targeted maturity mix and credit quality. Attach supplementary documents as appropriate.
DigiFT are proposing the following RWA products as treasury allocation for Arbitrum.
iSNR: A tokenized structured note linked to the performance of Invesco U.S. Senior Loan Fund.
The underlying senior loan fund primarily invests into senior secured loans with currently, over 87% into First lien (as of January 31 2025). This is a unique senior loan fund, given that it is able to provide daily liquidity in comparison to the traditional long-term liquidity that other private credit fund issuers provide.
More information about the funds can be provided via email.
2. Allocation of products
For allocation, DigiFT kindly ask Arbitrum to allocate ~3M USD into the senior loan strategy as a complement to the overall money market and treasury bill strategies.
3. Do investors have any shareholder, investor, creditor or similar rights?
iSNR is issued under a Special Purpose Vehicle (SPV) model, and the token represents the legal and beneficial ownership of the structured note issued by DigiFT’s dedicated issuer and does not legally own the shares of the underlying.
Describe the legal and contractual structuring for your product including regulatory bodies overseeing your business and the product and identifying all legal jurisdictions interacting with your product. Attach supplementary documents as appropriate.
In the case of SPV model, the issuer purchases units of the underlying fund and issues it as a structured note to investors, in the form of debt. The structured note is then tokenized, representing ownership of the structured note and benefitting from the shares of the underlying fund.
As for the business, DigiFT is the first and only RWA onchain exchange on Ethereum public blockchain with a Capital Market Services (CMS) License and is approved as a Recognized Market (RMO) Operator by the Monetary Authority of Singapore (MAS). With these licenses, DigiFT is approved to offer:
- Primary market issuance and broker-dealer services.
- Secondary marketplace ‘wallet to wallet’ order-matching (via AMM, OTC or P2P), transfer agent and settlement services.
- Accept fiat, stablecoins and cryptocurrencies for trading of RWA tokens.
- Custodial Services.
4. Would Arbitrum’s assets be bankruptcy remote from your own entity and its officers/key contributors? If so, please explain the legal and contractual basis. On a confidential, non-reliance basis, provide any third party legal opinions to support the conclusions.
How are Arbitrum’s assets protected vis-a-vis the bankruptcy of the brokerage or applicable financial institution (e.g., bank deposit insurance, securities insurance, etc.)?
Under SPV model, the issuer purchases the units from the underlying fund’s issuer and then tokenized and distributed by DigiFT as iSNR tokens, which render Arbitrum’s investments bankruptcy remote
5. Does the Issuer issue more than one asset? If so, what is the priority relationship between different asset classes?
Yes. DigiFT is a regulated exchange in Singapore. DigiFT’s licenses (CMS and RMO) allow DigiFT to issue products within certain catagories (e.g. securities).
As a platform, those assets classes have equal priorities on DigiFT.
6. Provide a detailed cash flow diagram that shows the flow of funds from ARB/Fiat conversion, investment in underlying asset, payment of expenses, sale of underlying asset, and repayment (Fiat/ARB conversion), including the counterparties and legal jurisdictions involved.
7. Describe anticipated tax consequences (if any) in transacting on the underlying and/or receipt of yield.
As DigiFT is a Singapore-incorporated company, the tax consequences described herein relate to Singapore tax residents. Non-Singapore tax residents must be considered on a case-by-case basis.
Income derived by the relevant Singapore tax resident tokenholders is expected to be treated as retaining its underlying character for Singapore income tax purposes. This means if the underlying asset represented by the tokens is debt securities, the distributions from the tokens will be treated as interest income. Similarly, if the underlying asset represented by the tokens is shares, the distributions from the tokens will be treated as dividends or capital gains and taxed accordingly.
Non-Singapore tax residents will be taxed according to their tax domiciled country’s tax laws. (CC: please consult your independent tax consultant for tax advice)
8. Describe the process and expected timeline for liquidation of assets, if given instructions to do so by Arbitrum governance.
Due to the structure of the product, iSNR is able to provide daily liquidity in comparison to others offering tokenized private credit that can only provide quarterly liquidity and redemption.
Given instructions from Arbitrum, we are able to process liquidation of assets of iSNR in T+5. DigiFT is currently in talks with liquidity providers to enhance our real-time liquidity capabilities.
9. What amount of first-loss equity will Sponsor provide to ensure over-collateralization, how is the first-loss equity denominated, and what is the source of capital?
Not Applicable.
10. Describe the liquidity and stability of the proposed underlying assets, including anticipated settlement times from the sale of the underlying to the repayment of ARB.
iSNR has daily liquidity, it can open daily subscription and redemption with daily NAV. The settlement time is T+5.
11. If relying on the blockchain for any of the transactional flows, please describe any blockchain derived risks and mitigations.
Below are some of the risks might have during the flows. Note DigiFT’s smart contracts are on Arbitrum, and underlying assets are safely held off-chain via a trust structure.
- Blockchain derived risks
- After deploy our smart contract on Arbitrum, all the on-chain process will be completed on Arbitrum, there might be risk that Arbitrum cease function.
- For RWA tokens, assets are custodied off-chain, while all the transaction histories are onchain verifiable. In this case, still safe.
- Smart contract risk on DigiFT exchange
- DigiFT has smart contract audit from leading audit firms. Meanwhile real world assets are custodied offchain with a trust structure, token representing owner rights are in investors’ own wallet.
- Leak of wallet.
- On DigiFT’s platform, asset tokens are only allowed to transfer within whitelisted address, and DigiFT has control over the tokens. In worst cases, Arbitrum DAO can recover via an off-chain process.
12. Does the product rely on any derivative product (swaps,OTC agreements)?
No. iSNR does not rely on any derivative product.
13. List all the third party counterparties linked to your assets including and not restricted to prime broker if any, custodian, reporting agent, banks for derivatives or loans and provide primary contact details for the third party counterparties
iSNR:
Underlying Fund Issuer: Invesco Senior Secured Management, Inc
Investment Manager: Invesco Senior Secured Management, Inc
Custodian: State Street Bank International GmbH
Administrator: State Street Bank International GmbH
Auditor: Pricewaterhouse Coopers
Tokenization & Distribution partner: DigiFT Tech (Singapore) Pte.ltd
DigiFT:
iSNR Issuer: Red Cedar Digital Pte. Ltd.
USDC Exchange Service Provider: Circle Smart Contract
Smart Contract Auditors: Hacken, Slowmist, and others
Internal Auditor: Deloitte
External Auditor: Pricewaterhouse Coopers
Legal: Linklaters, Dentons
Bank Account: DBS SG
No derivatives nor loans are related to our products at the moment.
14. Can you explain how is risk management (inv and operational) being done? Can you provide a copy of your risk management policy?
Operational risk management is part of the ERM (Enterprise Risk Management), as a regulated exchange, DigiFT has a comperhensive risk management policy, based on Principles and Guidelines of ISO 31000 and COSO ERM Integrated Framework. The overall governance stucture includes different roles with respective responsibilities. For example, we have board which has overall responsibilities of the governance of risk, risk oversight committee in which members are required to have risk management related skills and experience, and audit committee which should engage the internal auditor to periodically review the adequacy and effectiveness of risk management oversight structure and processes.
Risk management policy manual is attached in email.
Performance reporting
1. What are your proposed performance benchmarks? If this is substantially different from the underlying assets, please explain why.
As distributors, DigiFT does not propose performance benchmarks as we are not the issuer of the underlying fund. DigiFT follows the performance benchmarks of the products’ underlying.
iSNR’s underlying fund follows the S&P UBS Leveraged Loan Index as their benchmark.
More details can be provided via email or telegram.
2. Describe the content, format, preparation process, and cadence of performance reports. This should include proof of reserves, if appropriate. Please include a sample report.
DigiFT is able to send the factsheet which includes sample of the underlying fund performance report via email. Please refer to its content and format.
The performance report of the underlying fund is provided to DigiFT on a daily basis by the investment manager and can be made available to Arbitrum upon request.
Separately, DigiFT provides a monthly account statement to token holders, showing token activities in terms of subscription and redemption as well as the amount of tokens being held by the investor.
3. Who provides the performance reports in respect of the underlying assets?
The performance reports are provided by the issuers of the underlying fund. In this case, iSNR’s underlying performance reports are provided by Invesco.
4. Describe any formal audit process and timing of such audits.
These tokenized RWA funds are tokenized versions and 100% representation of already existing, with long history, underlying funds. The underlying funds are audited in accordance with their issuers.
DigiFT also conducts external and internal audits once a year, internal audit is usually conducted during Q2 by Deloitte and external audit is conducted during Q4 by PwC.
Pricing
1. Provide a copy of your standard contract, or one similar to what is being proposed here.
We have contract note and account statement for our investors. Samples are attached in email.
2. Fee summary: Inclusive of the full scope of services requested. Product Fee schedule If asset based Fee calculation for our plan if asset based Annual fee if flat fee Any other fees (including redemption or minting fees)
For detailed fee structure, please check the factsheet sent via email.
Assets Management Fees: 80bps
Subscription/redemption fees: 0
Redemption fee: USD 80
Conversion fee: USDC/USD: 0; USDT: 10bps
3. Describe frequency of fee payment and its position vis-a-vis payment priority compared with other expenses (i.e., cash waterfall)
Subscription/redemption/conversion fee will be charged at the time of transaction. Management fee are included in the NAV.
Smart Contract/Architecture
1. How many audits have you had and name of auditors? Please provide a copy of reports.
DigiFT’s smart contract have undergone ten audits. Auditors include Hacken, Slowmist, Numen and others.
2. Is the project permissioned? If so how are you managing user identities? Any blacklisting/whitelisting features?
Yes the project is permissioned. The Fund Token contract is deployed on Ethereum and Arbitrum and has whitelisting capability. Various roles are designed to provide governance on different functions, including minter, burner, whitelist approver etc. The token holder needs to be whitelisted before holding or transferring the token.
3. Is the product present on several chains? Are there any cross chain interactions?
iSNR is on Ethereum and Arbitrum. Recently announcement about iSNR on Arbitrum: DigiFT launches Invesco private credit token on Arbitrum
Currently, DigiFT is working on expanding our multi-chain and cross-chain capabilities.
4. Are the RWA tokens being used in any other protocols? Please describe the various components of the ecosystem
DigiFT and iSNR is currently deployed on Ethereum and Arbitrum.
5. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
Various roles are designed to provide governance on different functions, including minter, burner, whitelist approver etc. The token holder needs to be whitelisted before holding or transferring the token.
The Tokens’ contracts are deployed on Ethereum and Arbitrum, and has whitelisting capability.
6. Is there any custom logic required for your RWA token? If so please give any details.
The token holder needs to be whitelisted before holding or transferring the token.
The token is ERC-20 compatible, with whitelist/ blacklist and force transfer functions to ensure regulatory compliant. The token can be transferred to any whitelisted wallet, however, due to tax consideration, we do not recommend Arbitrum to transfer the token to other addresses that are under different UBO.
DigiFT is happy to address any specific questions related to smart contracts architecture.
Supplementary
1. Please attach any further information or documents you feel would help the screening committee or ARB tokenholders make an informed decision. If you prefer this not to be made public, it can be emailed to rwa@dao.arbitrum.foundation. Please mention in your application that documents have been emailed for committee review.
The following information/supporting documents are to be sent to Arbitrum via email privately:
Underlying fund information, sample reports, marketing materials and related legal documents.