Jakarta, CNBC Indonesia – The largest bank in Singapore and Southeast Asia in terms of assets, DBS Group targets the number of members on the new DBS Digital Exchange cryptocurrency trading platform to be 1,000 by the end of December.
Meanwhile, the target in the next 3 years the number of members will increase by 20%-30% every year in line with the rise of digital tokens from investors and the public.
Late last year DBS Bank Singapore (DBS) announced the launch of a digital asset exchange via the DBS Digital Exchange, which enables institutional investors and accredited investors to take advantage of a fully integrated tokenization, trading and custody ecosystem for digital assets.
Digital currency exchange in the form of trading cryptocurrency will facilitate the exchange of fiat currency to crypto currency and vice versa.
DBS Digital Exchange will offer exchange services between four fiat currencies (SGD, USD, HKD, JPY), and four cryptocurrencies, namely Bitcoin, Ether, Bitcoin Cash, and XRP.
In an interview, Eng-Kwok Seat Moey, Head of Capital Markets at DBS, said the DBS Digital Exchange, which was founded last December as a dedicated member exchange, saw strong demand from corporate investors, accredited individuals and investment firms seeking manage the wealth of rich families.
“We are growing very fast. Investors are gradually exploring cryptocurrencies and digital assets,” said Eng-Kwok, who is also the Chairman of DBS Digital Exchange.
DBS’ entry into the crypto business comes after its CEO Piyush Gupta directed the bank to invest billions of dollars in upgrading its technology infrastructure over the last 8 years as the company dives into cloud computing and digitizes services.
DBS Digital Exchange bills itself as the only full-service bank-backed digital exchange in the world – offering cryptocurrency trading, asset tokenization and digital storage services in the crypto sector, where investor confidence is still low.
The soaring popularity of cryptocurrencies has created problems for mainstream banks as they try and balance client interest in digital coins with regulatory concerns about the risks involved.
Standard Chartered is said to be setting up a joint venture to set up a cryptocurrency broker and digital exchange platform in the UK and Europe, while HSBC said it has no plans to offer digital currency to customers in those markets.
Eng-Kwok said DBS’ position as one of the largest wealth managers in Asia and its expertise in initiating transactions in the capital market will help attract users and increase their trading volume.
This move comes at a time when DBS – as well as other banks – is looking to increase fee-based income as net interest income declines amid its low interest rate policy.
Eng-Kwok said the exchange hopes to list at least half a dozen security tokens by the end of 2022.
A security token is a unique type of crypto asset designed to validate and ensure ownership rights and serve as a value transfer instrument for a specific asset, bundle of assets, or set of rights.
Singapore’s central bank (MAS, Monetary Authority of Singapore) regulates business crypto under the new regulatory framework that came into force in January 2020.
DBS’s securities brokerage business has received in-principle approval under the new rules, which will allow it to directly support asset managers and companies to trade digital payment tokens through the DBS digital exchange.
The Singapore Stock Exchange owns a 10% stake in DBS’ digital exchange.
“Having a mainstream bank helps foster an environment where settlement risk is minimal and there is protection of user deposits and security of transactions,” said Ganesh Viswanath-Natraj, assistant professor of finance at Warwick Business School in the UK.
Last week, Binance, one of the exchanges cryptocurrency The world’s largest, said it would limit its services in Singapore, days after the central bank told it to stop offering payment services.
“Our goal is to create a platform that can serve the entire digital asset value chain, from deal initiation to tokenization, listing, trading and storage – all within the service of a trusted and regulated bank,” said Kwee Juan Han, Group Head of Strategy and planning at DBS.
Han said the trend of companies exploring fundraising options through tokenized assets, and the increasing interest of private investors in expanding the share of digital assets in the portfolio, provided the opportunity and timing for DBS to launch a digital exchange.
He said DBS expects its new businesses, including digital exchange and carbon trading, to generate total revenue of SG$350 million or equivalent to Rp. 3.71 trillion (Rp 10,621/SG$) by the end of next year.