DBS sees tokenised finance as future

Regulatory uncertainty is the biggest barrier.

DBS Group Holdings Ltd., Southeast Asia’s biggest lender by assets, sees a tokenised financial world as inevitable but warns that fragmented regulations and unsettled definitions of digital money remain key obstacles.

Client demand for digital assets has evolved over the past decade, moving from niche crypto adopters to mainstream institutions, said Rachel Chew, group chief operating officer and head of digital currencies, Global Transaction Services, DBS Bank.

“As more regulations come into play, traditional businesses, large institutions, high-net-worth clients—they are all keen to get this as part of their portfolio,” she told Asian Banking & Finance via Zoom.

Tokenisation, which splits assets into smaller parts on a blockchain, lets money move around 24/7, unlike traditional finance that stops on weekends and holidays, Chew said.

DBS began exploring the digital asset space in 2016 under the Monetary Authority of Singapore’s (MAS) Project Ubin, a study on using blockchain for payments and securities. The bank has since joined initiatives including Project Bloom, which tests tokenised commercial bank money and stablecoins.

DBS launched its digital exchange in 2020, offering institutional and accredited investors a platform for cryptocurrency trading, along with post-trade services.

The bank handles digital assets by issuing and listing tokens, trading and safeguarding them, managing payments and settlements, and supporting the wider ecosystem, Chew said.
Digital asset players still need a bank account to operate, she said, noting that DBS could act as a reserve bank for them.

Chew cited regulatory uncertainty as the largest barrier. “We have yet to come to a standardised way to define digital assets,” she said. 

The rules differ across jurisdictions, with most guidance focused on token redemption periods rather than cross-border interoperability.

Tokenisation standards for instruments—including stablecoins and central bank digital currencies —remain unclear. DBS participated in an industry working group in Hong Kong that issued guidance on token standards in October.

“That’s one step forward, but we need standards on the instruments,” Chew said.

Banks without the right technology or expertise may struggle to participate, whilst private digital money risks eroding public trust in what constitutes money.

“People believe that they are the same as what we understand to be money today. It’s quite different,” she said, citing decentralised finance platforms like Ethereum and private stablecoins.

DBS is among 37 banks participating in the Swift Digital Ledger, a blockchain initiative running alongside the traditional fiat correspondent network. The bank is part of the core design group of 10 banks shaping the ledger’s architecture.

The lender is also testing bilateral token interoperability with JPMorgan Chase & Co. Customers of either bank can swap deposit tokens for the other bank’s coins or convert them to fiat accounts.

“It will get harder before it gets better,” Chew said of standardising digital assets. “Until we get there, there will be massive fragmentation.”

Despite hurdles, Chew said tokenisation offers tangible advantages for both banks and clients. Fractionalisation broadens investment access, real-time settlement improves liquidity, and the underlying infrastructure may eventually reduce operational risk.

The digital exchange and related services also position DBS to capture the growing institutional interest in digital assets, which now extends beyond crypto-native firms to high-net-worth clients and corporates seeking diversified portfolios.

Individual institutions are ready to get their hands dirty and try out the new technology, Chew said. She added that broader adoption depends on collaboration among regulators, banks, and market participants to accelerate standardisation.

“There needs to be more work among the participants to drive standards faster,” Chew said. “That’s one hurdle before it gets better from the fragmentation.”