How “Regulated DeFi” Will Ensure Financial Inclusion

Access to high quality investment products (like listed securities or private equity assets) has always been restricted to accredited or institutional investors. InterOpera’s founder Will Lee and CEO Michael Chin explain how they are designing an infrastructure to ensure safe and equitable access to such investments for all.

By Will Lee & Michael Chin | 9 May 2022

Will Lee is the founder and Michael Chin is the CEO of the InterOpera group.

The traditional finance industry has been structured in a way that even the simplest of transactions will likely pass through layers of intermediaries, in an increasingly inefficient system with mounting costs and the risk of human error unmitigated. 

As a result, the average retail investor bears more cost – assuming he or she even qualifies to participate in capital markets products – than an institutional investor. According to an ESMA report, retail investors pay 30% to 50% more in costs than institutional investors when investing in UCITS funds. This, in essence, amounts to financial exclusion.  

DeFi is not the (complete) answer

DeFi, or decentralised finance, has rewritten the rules and relationships of traditional finance – increasing customers’ access to and direct control of their financial and investment portfolios while eliminating the middle layers of financial intermediaries. However, one thing DeFi does not afford is investor protection. 

More than $10 billion worth of DeFi funds were stolen in 2021, a sevenfold increase from 2020. A decentralised ledger may make transactions immutable and transparent, but user identities remain shrouded in anonymity. Since there are no regulations or central authorities involved, and transactions are irreversible, victims of DeFi fraud or theft end up with no legal recourse. 

While technology can powerfully and effectively create financial inclusion, DeFi in its current form cannot be the answer, since investor rights are still not completely protected. 

Introducing a “regulated DeFi” infrastructure

Creating true financial inclusion for all requires a fundamental reconfiguration of the regulatory and technology infrastructure on which the financial industry is anchored, taking into account the need for transactional efficiency and security. 

To this end, we invented InterOpera’s flagship product, Regulated DeFi Operating System (RDOS) – a universal multi-chain platform that facilitates tokenised trading of securities and digital assets within prevailing regulatory frameworks. While many fintech companies are trying to disrupt or even replace the current financial system in its entirety, the way forward as we see it is to bring together the advantages of decentralised user-centred blockchain ledgers and the safeguards provided by financial regulations and institutions. 

In DeFi investing, where transactions are made without financial intermediaries, smart contracts are essential – these are programmes that automatically execute and create a record on a blockchain when certain conditions are met. RDOS leverages this technology, incorporating financial regulations as additional conditions, thus providing investors with an added layer of protection. 

In short, RDOS is architected with smart contracts that ensure every transaction documented on blockchain inherently satisfies regulatory requirements such as:

  • Verification of investor identity – Enabling the ”whitelisting” of investors based on Know Your Customer/Anti-Money Laundering/Countering of Financing of Terrorism (KYC/AML/CFT) and other global regulatory requirements, while keeping personal data secure and protected 
  • Product & investor suitability – Screening based on regulations applicable to local/overseas investments, investment classes, investor categories, etc. 
  • Tax implications – Calculating and processing taxes, and recording transactions in a retrievable format compliant with requirements of tax authorities

With RDOS in place, not only will investors have peace of mind, but authorities can be satisfied of the legality of transactions, and financial institutions can offer a more trustworthy and future-proofed service to their customers. 

By harmonising regulatory requirements with demand for a new and innovative way of investing through blockchain and DeFi, we can connect issuers of securities to a wider pool of retail investors, thereby offering investors a wider range of quality financial and investment products. We believe that a “regulated DeFi” ecosystem like this creates mutual benefit and opportunities that reward all parties involved. 

Singapore is the ideal location to showcase and evolve such financial innovation and transformation. In our submission for the Monetary Authority of Singapore’s (MAS) Global CBDC Challenge – shortlisted with 14 other finalists from a field of over 300 candidates – we demonstrated the interoperability of RDOS with various central bank digital currencies (CBDCs) and stablecoins. 

We are also leveraging Singapore’s position as a fintech hub to expand our reach. Last year, we secured partnerships with the Hong Kong Monetary Authority (HKMA) and the Bank of International Settlements (BIS) for Project Genesis, an initiative to create tokenised green bonds for retail investors. Within the region, we are also working with partners in Thailand, South Korea and the Philippines to bring RDOS to other markets. 

Lowering the barriers to prime investments

Traditionally, institutional investors and high-net-worth individuals have exclusive access to quality investments – such as private equity, hedge funds or bonds with a minimum investment of $200,000 – which are effectively out-of-reach for retail investors. This has created an ecosystem of fintechs on a mission to make such investment options available to all investors, increasing financial inclusion. 

This too was our objective when we established operations for the InterOpera group in Singapore – which includes the Shareable Asset mobile app, a digital investment platform for retail and other qualified investors to access quality investments in an affordable and secure manner. 

Utilising RDOS, investment interest can be “subdivided” into smaller portions (which remain custodised), allowing our investors to buy a small portion (i.e. an odd lot) of the underlying investment. 

Through this process, we are creating a means of offering “digital custody” of investment interest. This is a gamechanger because it allows the non-traditional investing class (i.e. retail investors) equitable access to quality investments or alternative assets like artwork and real estate. Since investors’ transactions are documented on a publicly distributed ledger – as opposed to centralised physical or digital records held by a financial institution – their ownership of our tokens is direct and immutable, giving them greater control over their investments. Furthermore, blockchain technology reduces the number of financial intermediaries, which in turn increases efficiency and lowers costs for retail investors at large. 

To date, our investors have acquired a share in eight real estate projects in the UK. Retail bonds or listed corporate bonds will soon be offered, alongside other products such as ETFs. InterOpera’s goal is to enable financial inclusion in Singapore by eventually offering as broad a range of quality investments as possible for everyday investors. 

The future of blockchain-based financial infrastructure

Usage of blockchain in the regulated financial industry has steadily increased in the region. In August 2018, the World Bank raised A$110 million by issuing a blockchain bond on Commonwealth Bank of Australia’s bond-i platform. In September 2020, the Bank of Thailand launched a blockchain-based bond platform which issues government savings bonds to Thai citizens. In Singapore, MAS has also embarked on blockchain initiatives such as Project Ubin in 2016 and a wholesale cross-border CBDC experiment with Banque de France in 2021. 

On the regulatory front, MAS released guidelines on digital token offerings in 2017 and introduced the Payments Services Act in January 2020 to further strengthen regulation around blockchain-based payment tokens. The Act includes strict regulations on customer money protection which brings it in line with the requirements imposed on capital markets service providers. 

Singapore’s clear regulations on blockchain businesses, coupled with the city-state’s Smart Nation ambitions, mean relevant parties are open to financial innovation. This is how InterOpera has been able to develop our RDOS infrastructure and products in Singapore, whereas such opportunities still do not exist in many other developed economies. 

We believe that Singapore is the natural base for InterOpera to grow and scale our offerings. In the process, we are committed to attracting top-tier tech professionals who are drawn to the fintech opportunities in this region. For instance, one of our recent hires is leaving Silicon Valley for the first time in his career and relocating to Singapore to join us as a world-class engineering talent in developing blockchain interoperability. We are also excited to connect engineers in the InterOpera group with local graduates to mentor and strengthen the next generation of talent. 

Singapore’s competitive strengths as a world-class tech and finance hub gives fintech startups like ours the credibility to expand regionally and conquer globally, write and set new standards for digital financial infrastructure, and offer innovative technology that empowers the connection of public and private capital markets across the world. 

About Will

Will Lee is the founder of InterOpera. He is a serial entrepreneur and a Master’s graduate from Stanford University in computer science (AI).

Connect with him here.

About Michael

Michael Chin is the CEO of InterOpera. A seasoned investment banker and asset management professional with over 30 years of experience, he was formerly the CEO of UBS Asset Management in Singapore.

Connect with him here.


Launched in 2020, InterOpera aims to provide access to quality investment assets and capital markets products for everyday investors through a “regulated blockchain” platform. Their digital infrastructure was showcased at Singapore FinTech Festival 2021 and Hong Kong FinTech Week in 2021. 

To date, the startup has raised close to US$9 million from investors such as Vertex Ventures, Kakao Investments and Korea Investment Partners. Its partners include Bank for International Settlements, Hong Kong Monetary Authority, Standard Chartered, Union Bank of the Philippines, Krungthai Bank and Klaytn. 

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