A DIGITAL currency exchange backed by Singapore‘s largest lender DBS is in the works, although the bank is still in the process of seeking regulatory approval. Industry observers say that if approved, the DBS Digital Exchange could be one of the world’s first crypto exchanges backed by a traditional bank. A version of the exchange’s Web page, made public for a short while on Tuesday but later taken down, said the platform will list four top crypto currencies – Bitcoin, Ether, Ripple and Bitcoin Cash, against multiple fiats, including the Singapore dollar, US dollar, Hong Kong dollar, and Japanese yen.
An archived version of the Web page said that the exchange will allow companies – small and medium-sized enterprises and large corporates alike – to raise capital via security tokens through the digitisation of their securities and assets. This will allow issuers to reach a wider base of investors that might not traditionally have access to such tokens. To be clear, however, the aim is to raise private capital from qualified investors. Security tokens are a type of crypto currency tied to actual assets, such as real estate, a car, or a corporate stock. Some consider them to be safer, as they are subject to strict regulations.
The now-defunct page read: “Companies searching for a regulated option to raise private capital from qualified investors can now tap DBS Digital Exchange to securitise real assets into tradeable digital tokens.” Unlike most digital exchanges, the DBS Digital Exchange will not hold any of the crypto assets. They will instead be kept with the banking arm of DBS via an “institutional grade” custodian, dubbed the DBS Digital Custody, which is “specially tailored for safekeeping digital assets”, said the archived page.
In response to queries on the exchange, a spokesperson at the bank said: “DBS’ plans for a digital exchange are still a work in process, and have not received regulatory approvals. Until such time as approvals are in place, no further announcements will be made.” The bank declined to comment on questions relating to fees, eligibility and when it might expect to receive regulatory approval.
Various communities on messaging apps Telegram and WhatsApp were abuzz with the news by the end of the day; platforms reporting on the crypto space, such as Bitcoin.com, CoinDesk and Crypto Global also reported about it. Hagen Rooke, a lawyer who specialises in matters related to blockchain and distributed ledger technology, called the proposed exchange a significant step in the institutional endorsement of crypto assets. “The marriage of institutional financial services and crypto has been gathering pace lately,” he said, citing as an instance PayPal’s move to support crypto currencies as a payment method.
“At present however, there are no other notable examples of a traditional bank launching its own crypto currency exchange,” he added, noting that DBS’ entrance into the crypto sector may “reinforce trust” in this asset class. The proposal for the bank to act as custodian for the exchange will lay the foundation for the bank’s “standalone crypto-custody offering” in due course, he said. Since 2017, Singapore has ranked among the world’s top three markets for initial coin offerings, with the United States and Switzerland.
A DBS study published in August said three of the top 10 crypto derivatives exchanges are headquartered here. They are Huobi, Bybit and Phemex. Digital asset bank Sygnum, the brainchild of professionals in Singapore and Switzerland, obtained a licence last year, allowing it to operate in Singapore. It offers services in regulated custody, brokerage and asset management, among others.
The Monetary Authority of Singapore brought crypto businesses into the regulatory fold this year, requiring that all such firms are required to first register and then apply for a licence to operate in the jurisdiction.