DBS, a Singaporean bank, has big aspirations for digital exchange

DBS Group (DBSM.SI) of Singapore aims to quadruple the number of participants on its new cryptocurrency trading platform to 1,000 by the end of December and to grow by 20-30% annually for the next three years as digital tokens acquire acceptance.

DBS top executives said in an interview that the DBS Digital Exchange, which opened as a members-only market in December, is witnessing strong demand from corporate investors, certified individuals, and investment institutions that handle the fortunes of wealthy families.

“We are growing very rapidly. Investors are gradually exploring cryptocurrencies and digital assets,” said Eng-Kwok Seat Moey, head of capital markets at DBS, Southeast Asia’s largest bank by assets, and chairperson of the exchange.

DBS’s move into crypto comes after CEO Piyush Gupta led the bank to invest billions of dollars in IT infrastructure upgrades over the last eight years as it adopted cloud computing and digitized its services.

In a crypto industry where investor trust is still low, DBS Digital Exchange promotes itself as the world’s only bank-backed full-service digital bourse, including cryptocurrency trading, asset tokenization, and digital custody services.

The rising popularity of cryptocurrencies has created a challenge for traditional banks as they struggle to balance their customers’ desire for digital coins with regulatory concerns about their risks. Standard Chartered (STAN.L) is forming a joint venture to launch a cryptocurrency brokerage and exchange platform in the United Kingdom and Europe, while HSBC (HSBA.L) has stated that the bank has no plans to offer consumers digital currencies.

DBS’ position as one of Asia’s largest wealth managers, as well as its competence in originating capital market deals, will help it attract users and increase trading volume, according to Eng-Kwok.

The decision comes as DBS, like other banks, seeks to increase fee-based revenue as net interest income falls due to low-interest rates. By the end of 2022, the course intends to offer at least a half-dozen security tokens, according to Eng-Kwok. Singapore’s central bank implemented a new regulatory framework for cryptocurrency enterprises in January 2020.

Under the new environment, DBS’ brokerage arm has acquired preliminary permission, allowing it to actively assist asset managers and enterprises in trading digital payment tokens on the market. The Singapore Exchange (SGXL.SI) owns a 10% share in the stock exchange.

DBS Digital Exchange allows users to trade bitcoin, bitcoin cash, ethereum, and XRP for dollars, Singapore dollars, Hong Kong dollars, and yen.“Our aim was to create a platform that could serve the entire digital asset value chain, from deal origination to tokenization, listing, trading, and custody – all within a trusted and regulated bank franchise,” said Kwee Juan Han, DBS’ group head of strategy and planning.

DBS saw an opportune opportunity to establish the bourse because of a trend of firms investigating fundraising alternatives using tokenized assets, as well as increased interest among private investors to increase the share of digital assets in their portfolios, according to Han.