DBS Digital Exchange: Serving the wealthy, yet unable to escape the 'can't resist' allure
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DBS Digital Exchange: Serving the wealthy, yet unable to escape the 'can't resist' allure
DBS Bank is the largest bank in Southeast Asia and also a strong believer in emerging technologies.
Navigating Web3 tides with focused insightsSettled at Last!
On December 10, DBS Bank of Singapore officially announced the launch of its digital asset trading platform, DBS Digital Exchange, which will commence trading next week. According to DBS CEO Piyush Gupta, DBS Digital Exchange will offer exchange services, spot trading, and custody services between four fiat currencies (SGD, USD, HKD, JPY) and four of the most mature digital assets (BTC, ETH, BCH, and XRP).
Besides trading cryptocurrencies, what else does DBS Digital Exchange have up its sleeve?
More Than Just Cryptocurrency Trading
Beyond trading four cryptocurrencies like Bitcoin, DBS Digital Exchange aims to leverage blockchain technology to create an ecosystem for fundraising through asset tokenization and secondary trading of digital assets, primarily including:
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Security Token Offering (STO) — a regulated platform for issuing and trading digital tokens backed by financial assets such as shares in private companies, bonds, and private equity funds.
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Digital currency exchange — facilitating spot trading between fiat currencies and cryptocurrencies. DBS Digital Exchange will provide trading services between four currencies (SGD, USD, HKD, JPY) and four of the most established cryptocurrencies (BTC, ETH, BCH, and XRP).
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Digital asset custody services — institutional-grade digital custody solutions to meet the growing demand for secure digital asset custody under current regulatory standards.
Currently, the Monetary Authority of Singapore (MAS) has granted in-principle approval recognizing DBS Digital Exchange as a Recognized Market Operator, allowing it to operate organized markets for assets such as equities, bonds, and private equity funds.
That means once STO operations are fully established, DBS Digital Exchange will also become a small-scale financial asset trading platform.
Secondly, one business that should not be overlooked is custody.
According to sources from Singapore's banking industry, UOB, DBS Bank’s main competitor in Singapore, is accelerating development of its digital asset custody solution and actively hiring relevant personnel.
Globally, cryptocurrency custody services have now become virgin territory fiercely contested by major banks.
In July 2020, the U.S. Office of the Comptroller of the Currency (OCC), which regulates federally chartered banks, announced that banks under its jurisdiction are now authorized to provide cryptocurrency custody services.
In August, two major South Korean commercial banks, Woori Bank and Shinhan Bank, said they were discussing the possibility of introducing cryptocurrency services. NH Nonghyup Bank also stated it was collaborating with blockchain research institute Hexlant to introduce cryptocurrency custody services.
In December, Standard Chartered’s innovation and venture arm, SC Ventures, jointly launched Zodia Custody (“Zodia”), an institutional-grade cryptocurrency custody solution, with Northern Trust.
Overall, cryptocurrency custody is becoming critical infrastructure for the crypto market. A regulated custodian can serve as a bridge connecting the cryptocurrency market with governments and traditional capital.
Membership-Based Exchange
Notably, DBS Digital Exchange is a membership-based exchange targeting institutional investors and accredited investors—more directly, high-net-worth individuals—reflecting the growing acceptance of Bitcoin among the wealthy.
Today, Singapore has become Asia's private banking hub and is seen by many institutions as challenging Switzerland’s global dominance.
Singapore’s rise in private banking rests on two key advantages: first, high-net-worth individuals appreciate its strict client confidentiality, with rigorous enforcement of Singapore’s Banking Secrecy Act considered a major driver; second, low tax rates.
Additionally, its surrounding environment makes Singapore a safe haven for wealth.
As the leading bank among Singapore’s three major banks, DBS acquired Société Générale’s private banking operations in Hong Kong and Singapore in 2014, gaining access to a vast base of high-net-worth clients.
Reports show that net fund inflows into DBS Private Bank surged 170% in the first half of the year, while assets under management (AUM) grew 9% during the same period.
When these high-net-worth clients seek to invest in cryptocurrencies, meeting their needs becomes an opportunity for DBS.
In official statements, DBS Bank noted, “The investor base and distribution network built through DBS Private Bank and DBS Vickers Online Securities enable DBS Digital Exchange to tap into a large pool of potential investors.”
Therefore, DBS Digital Exchange won’t lack customers.
Moreover, financial data shows that due to the pandemic, DBS Bank’s net profit in Q2 dropped 22% year-on-year, mainly due to loan losses, prompting DBS to actively seek new sources of profit growth.
In the same month it released its earnings report, DBS also published a 30-page in-depth report titled “Digital Currencies: Public and Private, Current and Future Money,” outlining the rising demand for crypto assets and their advantages in the digital world.
The report concluded:
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Digital payments and settlements have existed for a long time, and private digital currencies have been around for over a decade, but 2020 will mark a milestone in the history of digital finance.
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New technological frontiers in personal payments and settlements are opening up. The surge in private digital currencies has had profound impacts on money supply and value storage.
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For more than half a century, central banks have created money digitally, yet now face disruption from innovations and expansion in financial technology.
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Private-sector digital currencies, though still uncertain in terms of standards, regulations, and adoption, have already gained traction.
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Cryptocurrencies will continue to exist, but cash and traditional financial forms won’t disappear anytime soon.
Clearly, DBS Bank is well prepared.
The Ironic Delight
Finally, let’s revisit the ironic delight moment!
On November 15, 2017, David Gledhill, Chief Information Officer and Head of Group Technology & Operations at DBS, one of Asia’s largest banks, told CNBC: “We view Bitcoin as somewhat akin to a Ponzi scheme.”
During the sidelines of the Singapore FinTech Festival, he said Bitcoin transactions were “incredibly expensive” and “all costs are hidden through cryptographic mechanisms. We don’t believe DBS participating in this game would give us a competitive advantage.”
Gledhill said it made more sense for the bank to focus on electronic transactions of government-backed currencies. He predicted Bitcoin’s price would eventually become “very cheap due to its scalability limits.”
DBS Bank, the largest bank in Southeast Asia and a believer in emerging technologies, earlier this year announced the launch of a cloud-based e-learning management system.
However, Gledhill said Bitcoin wouldn’t help the bank attract clients, deposits, or wealth management business, so the bank’s stance at the time was “watching and learning.”
Bitcoin, how delightful!
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