DBS Digital Exchange poised to become key player in digital assets 

The members-only exchange is one of the world’s first bank-backed digital exchanges.

Digital assets and cryptocurrency are all the rage now and investors are eagerly jumping in this novel means of gaining higher returns. Singaporean investors, of course, are not to be left behind in this craze. Interest in investing in cryptocurrency, for example—nine in 10 Singapore investors plan to increase their crypto investments in 2022, with almost one-third of the 1,000 investors surveyed already holding crypto-related investments, a study by consumer insights company Milieu revealed.

It is a reality reflected in the success enjoyed by DBS Digital Exchange (DDEx), which reported a whopping S$1.1b in trading value just a year after it debuted, and only six months after the exchange went fully operational. 

DDEx is one of the world’s first bank-backed digital exchanges. Through DDEx, DBS offers corporate and institutional investors, accredited investors, and family offices who bank with DBS a regulated platform to tap into the growing digital asset economy.

Interest is strongest in DDEx’s integrated fiat trading capabilities for more seamless buying and selling of cryptocurrencies, as well as the institutional-grade digital custody solutions offered through the DBS Bank, according to Lionel Lim, CEO of DBS Digital Exchange.

Momentum notedly picked up significantly after DDEx went operational 24/7 in August 2021, with trading values in the fourth quarter coming in at close to S$800m—five times higher than that in the previous quarter, according to data released by DBS.

“DDEx has set itself apart from the competition with its membership-only business model, where it provides other brokerages and asset houses with a safe and secure solution to access the cryptocurrency and digital payment tokens market,” DBS said in a statement. 

Innovation is another key to its success: just this past year, DDEx did not just onboard other established banking and financial institutions, but even other digital asset exchanges.

Regulating the decentralised
Despite the high interest, digital assets space still is incredibly volatile, lending to its reputation as being “high-risk, high-reward.” For example, it’s common to see the value of cryptocurrencies, such as Bitcoin, dramatically rise and fall. In mid-April 2021, Bitcoin prices reached an all-time high of $60,000 in crypto exchange platforms, according to data compiled by Blockchain.com Just a couple of months later, its price plummet over 50%, falling as low as $29,795 in July.  

It’s a risk recognized by central banks around the world. In Singapore, local regulator MAS recently issued public guidelines banking the public marketing of cryptocurrency in an effort to discourage its trade. This reportedly caused crypto ATMs around the city to close down.

Read more: Cryptocurrency ATMs close down in Singapore following MAS clampdown: report

It’s a move that DBS and DDEx welcomed.

“As Singapore deepens its expertise and stature as a global hub for digital assets, it is imperative that clear guardrails are established to encourage sustainable growth in the digital asset industry,” the DBS spokesperson told Asian Banking & Finance in an exclusive correspondence.

The spokesperson added that MAS’ guidelines around the responsible promotion of digital payment services will help promote investor confidence and lay the foundation for a robust and credible digital asset industry in Singapore. 

In a separate media note, DDEx CEO Lionel Lim stated that DDEx operates under strong regulatory frameworks and in full compliance with prevailing licensing regimes. This provides DDEx customers with further assurance and confidence when they trade with the platform, Lim said.

As for the future of DDEx? Naturally, there’s only one way to go: up.

“[In] the coming year, we will be scaling our business to serve a larger target pool of customers, leveraging DBS’ digital asset ecosystem and deep investor base,” Lim said. “We also aim to list more digital payment tokens and STOs for trading.” 

Lim added that DDEx’s growth will also help grow the market for digital assets in the region, which in turn will contribute to deepening Singapore’s expertise and stature as a global hub for digital assets.”

And indeed, Singapore plays its cards right, it has the right mix of fundamentals to be a key beneficiary from this space, according to Deloitte’s Asia Pacific Financial Services Tax Leader Michael Velten and Singapore Financial Services Tax Director Matthew Lovatt.  

“Singapore is well poised to benefit as a first mover in the digital assets fund management space, given its strong financial services sector, its strength in the blockchain and fintech spaces, its talent pools in those areas, and the respect that the international community has for its robust but practical regulatory approach,” Velten and Lovatt wrote in a commentary piece.

Read more: Digital financial assets and fund management in Singapore―what more could be done?

With DBS’s digital asset exchange platform already on the roll, the bank may just be well-poised to be a leading player in this space.