Hi. By default, all feature services created by Survey123 store geometries in Geographic Coordinate System WGS 84 (4236). However, by using the submission_url setting in your XLSForm, you can have your survey point to a custom feature service in a different spatial reference.
As you know, the Survey123 field app works always in WGS84 Geographic Coordinates and the basemaps must be in Web Mercator Auxiliary Sphere. It is not possible to define datum transformations when you use a custom feature service. For the best control I would recommend to have data coming from Survey123 stored in WGS84 and then project the data using ArcGIS Desktop to your local projection. If you decide to use a custom feature service with a spatial reference different than the default, be aware that as of Survey123 version 1.8, you can only use submission_url to work with feature services published to ArcGIS Online or to an ArcGIS for Server designated as the Hosted Server of your Portal for ArcGIS.
I hope this clarifies your question. You may want to post Survey123 questions in the Survey123 GeoNet Group.
