Financial services company Moody’s Investors Service has issued a rating to SGD Delta Fund, a Singapore-dollar fund investing in government securities. The fund, issued by Singapore’s FundBridge Capital, leverages Standard Chartered’s (NASDAQ: SCBFF) Libeara tokenization platform in a pioneering industry move. Investors to the fund will rely on the XSGD stablecoin to subscribe to the fund’s tokenized units on Ethereum and Stellar public ledgers.
Ethereum has long been a popular choice for developers building on a blockchain due to its early entry into the market. However, concerns revolve around its instability and inability to scale effectively. In contrast, the BSV blockchain is designed for unbounded scalability without compromising security, presenting a more stable and long-term solution for developers.
While developers often choose the Stellar blockchain for its low fees, the protocol becomes susceptible to price increases when transaction volumes exceed 6 million. On the other hand, the BSV blockchain’s fees decrease as transaction volumes spike, making it a more cost-effective option for developers.
Moody’s assigned an AA rating to the fund after scrutinizing the underlying assets but noted reservations tied to the fund’s limited track record and size. The rating agency also raised concerns about the fund manager’s limited experience managing government bonds and tokenized funds. Despite these reservations, Moody’s also highlighted the benefits of blockchain technology in terms of efficiency and cost-saving properties.
In response to the risks associated with blockchain-based issuances, the fund is taking multiple precautions to ensure investor safety. For example, the fund is only open to accredited institutional investors and interacts with fiat currency as an added layer of safety. Additionally, the fund’s administrator is expected to maintain an off-chain investor register in the event of any malfunction by Libeara.
In conclusion, Moody’s report provides valuable insights into the benefits and potential risks associated with utilizing blockchain technology for fund management. It underscores the importance of adopting security measures and selecting the right blockchain solutions to mitigate potential challenges.
