On Dec 10, 2020, DBS Group Holdings, Southeast Asia’s biggest bank, announced that it would set up its full-service digital asset exchange.Trading is scheduled to start next week.
The platform, dubbed DBS Digital Exchange, introduces a regulated venue for the issuance and trading of security tokens backed by financial assets. These digitized tokens will include bonds, private equity funds, and shares in unlisted enterprises.
As per the release, DBS Digital Exchange will also offer support for cryptocurrency trading pairs for fiat currencies, including USD, HKD, SGD, and JPY. Piyush Gupta, DBS Group CEO, explained that the exchange would facilitate spot exchanges for fiat currencies against four crypto assets: BCH, XRP BTC, and ETH.
DBS bank’s exchange will initially only offer trading and custody services to institutional and accredited investors. The custody service will be bank and institution grade, with air-gapped cold storage that leverages all the state-of-the-art cybersecurity technology currently at the bank.
The development follows reports by DBS bank of an imminent digital assets exchange back in October. As we reported at the time, the Singapore based banking giant posted a webpage with details about the digital exchange offerings.
For an unknown reason, DBS then quickly took the page down soon after it started drawing widespread public attention.
Singapore Stock Exchange To Take a 10% Stake
What’s more, the Singapore Stock Exchange (SGX) is set to take a 10% stake in DBS Digital Exchange, while DBS Group Holdings will own the rest.
The two establishments will collaborate to bring digital asset custody services to accredited investors under regulatory standards.
The DBS bank’s CEO explained that the collaboration would deepen liquidity and reshape Singapore’s capital markets in the digital assets space.
“For Singapore to become even more competitive as a global financial hub, we have to prepare ourselves to welcome the mainstream adoption of digital assets and currency trading,” Gupta noted.
The CEO also recognized the growing trend of “tokenization of all kinds of assets” worldwide and projected that more exchanges would soon start dealing with tokenized assets.
Loh Chye, CEO of SGX, welcomed DBS’s move, asserting that the venture would integrate trust and efficiency in price discovery throughout the crypto sector.
DBS Digital Exchange comes after DBS bank obtained final approval from the Monetary Authority of Singapore to launch its platform as a Recognized Market Operator.
Interestingly, the move by Singapore’s biggest bank to introduce crypto trading services comes just days after Swiss digital exchange SDX unveiled plans to introduce a Singapore-based joint crypto exchange. The trading platform, slated for launch in 2022, will reportedly be built in collaboration with Japan’s SBI Holdings.
The Formal Banking Sector Is Embracing Crypto
According to DBS Chief Executive Piyush Gupta, the time is right for the digital assets sector to partner with the formal banking sector. Gupta also noted that cryptocurrencies such as BTC are increasingly forming an important part of wealth and private investors’ asset allocation.
Globally, banking giants are taking notice of the flourishing crypto space as the nascent industry continues to capture institutional players’ interest.
As per the latest data from digital asset manager CoinShares, institutional investors injected about $429M worth of capital into crypto funds and products as of Dec 7, 2020.