DBS on Thursday announced that it will set up a digital exchange, which includes a cryptocurrency trading platform that will launch from next week.
The platform will facilitate trading between four fiat currencies – the Singapore dollar, US dollar, Hong Kong dollar and Japanese yen – and four established cryptocurrencies including Bitcoin, Ether, Bitcoin Cash and XRP.
The members-only exchange, accessible by institutional and accredited investors, will also include a platform for the issuance and trading of tokenised assets and provision of digital custodial services.
The platform for security token offerings is expected to launch by the first quarter of next year.
The bank’s announcement follows in-principle approval given by the Monetary Authority of Singapore for the exchange, allowing it to operate organised markets for assets such as shares, bonds and private equity funds.
“our fiat currencies (SGD, USD, HKD, JPY) will be tradable against four of the most established cryptocurrencies covering 70%-80% of the market, namely bitcoin, ether, bitcoin cash and XRP, Gupta added.
“We are ready to begin crypto trading as early as next week,” said Gupta. “Security token offerings may take a month or two to get started – but in summary we are ready to go.”
The security token offering part of the digital exchange will comprise a regulated platform for the issuance and trading of digital tokens backed by financial assets, such as shares in unlisted companies, bonds and private equity funds.
“You can tokenize anything, you can tokenize a painting. But for now, we will be concentrating on financial assets.” Gupta said.
The third part is custody, which is said to be bank and institutional grade. This will be air-gapped cold storage that leverages all the existing cyber security tech at the bank, according to the CEO.
Interestingly, Swiss digital exchange SDX said this week it would also be building a crypto exchange in Singapore with Japan’s SBI Holdings, slated for launch in 2022.S
The DBS exchange will only be open to institutional clients and accredited investors, Gupta said.
“We are excited to apply our strengths in market infrastructure and risk management to this venture,” said Loh Boon Chye, CEO of SGX in a statement. “There are significant opportunities to bring trust and efficiency in price discovery to the global digital assets space. We look forward to working closely with DBS to advance Singapore’s standing as a multi-asset international financial center.”
The DBS Digital Exchange will operate as a subsidiary of the banking group, with DBS holding a 90 per cent stake and the Singapore Exchange holding the remaining 10 per cent.
It will be led by Lim Meng Wee, who has spent over a decade at the Singapore Exchange and helmed various senior roles in several broker-dealer firms across Asia.
In a media briefing on Thursday, DBS group chief executive Piyush Gupta noted that the rapid pace of asset digitalisation provides opportunities to reshape capital markets.
“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,” he said.
The global daily trading value on the world’s digital exchanges ranged from US$50 billion to US$100 billion in 2019, according to crypto market tracking app CoinMarketCap.
“Leveraging the power and strength of DBS Bank allows us to build volume, liquidity and scale in this exchange, in a manner other bespoke exchanges find difficult to do,” Mr Gupta said.
DBS created a stir in October when a Web page for the said digital exchange was unintentionally made public, but later taken down. The bank had then said that it was still seeking regulatory nod for the initiative.