Singapore's DBS bank to expand digital exchange solutions

Piyush Gupta’s view (chief executive of the bank) is that the crypto market downturn proved that established and regulated financial institutions, rather than just start-ups, should be offering products such as digital asset trading for retail investors.

Gupta said the bank has less than 1,000 members on the exchange but would soon offer the service to 300,000 of its wealthy clients across Asia including private banks, accredited investors, other exchanges, and funds through its DBS mobile banking app.

The bank’s brokerage arm in 2021 received a cryptocurrency licence from the Monetary Authority of Singapore, allowing its institutional and wealthy clients access to its DBS Digital Exchange by invitation.

The app would make the process less clunky and quicker for clients in addition to allowing DBS to offer it to more customers, he said. The executive said DBS had to support Singapore’s push into cutting-edge financial technology.

The plans from DBS come as Singapore grapples with its messaging over its attempt to be a crypto hub. The city-state, whose economy is reliant on financial services and trading, believes it must innovate to remain relevant.

Singapore’s response to the bear market

But this year’s collapse of several high-profile crypto groups, including Singapore-based Three Arrows and Terraform Labs, in addition to plummeting valuations globally has prompted questions over MAS’s strategy. In response, MAS said last week that the regulator would take steps to protect retail investors while affirming the city’s digital asset strategy.

Gupta described the challenges facing the country’s regulators. While Singapore wants to be a crypto hub, authorities are worried that the population can get mislead by the speculative aspects of crypto. As the representative sees it, losses suffered by retail investors in the crypto crash underscored the importance of more established financial institutions offering digital assets services.

The total number of trades on DBS Digital Exchange has more than doubled from April 2022 to the end of June, while the quantity of Bitcoin bought on the exchange has risen nearly four times. Similarly, the quantity of Ether, another popular token, has increased 65% over the same period.

The crypto market is still risky

About USD 1 billion had flowed out of DBS and into global crypto exchanges run by companies including Genesis and Binance before the bank launched its own exchange, the executive said. Entrusting companies such as DBS, which could put in place protections, would lead to better outcomes, he added.

As Gupta sees it, the market would be better off with frameworks and processes that are well-implemented, instead of having a regulated space and a parallel ‘underground market’, as people would gravitate towards the illicit market.