DBS unveils digital exchange for trade of cryptocurrency, token assets

SGX is taking a 10% stake in DBS Digital Exchange.

DBS is setting up a digital exchange that enables users to trade digital assets that include cryptocurrencies and raises funds through asset tokenization.

DBS Digital Exchange leverages blockchain technology to offer asset tokenization and trading, cryptocurrency trading and exchange services, and custody services, tapping into a market that reportedly saw a global daily trading value ranging between US$50b to US$100b in 2019.

The announcement follows the approval by the Monetary Authority of Singapore (MAS) to recognise DBS Digital Exchange as a Recognised Market Operator, allowing it to operate organised markets for assets such as shares, bonds, and private equity funds.

The exchange is members-only, open only for institutional investors and accredited investors. Cryptocurrency exchange services may start as early as next week.

Local bourse Singapore Exchange (SGX) is taking a 10% stake in the DBS Digital Exchange. Both parties will reportedly explore opportunities “to deepen the liquidity, scale and growth of Singapore’s capital markets in the growing area of digital assets and digital currencies,” the press announcement read.

Using the DBS Digital Exchange, clients are offered a regulated platform for the regulated issuance and trading of digital tokens backed by financial assets, such as shares of unlisted companies, bonds, and private equity funds.

It also enables cryptocurrency trading, facilitating spot exchanges from fiat currencies to cryptocurrencies and vice versa. It offers exchange services between four fiat currencies (SGD, USD, HKD, JPY), and four of the most established cryptocurrencies, namely Bitcoin, Ether, Bitcoin Cash and XRP.

The exchange will also offer institution-grade digital custody services to meet the demand for secure custodial services for digital assets under prevailing regulatory standards.

The announcement has been met with enthusiasm by some technology and cryptocurrency-related firms.

“The launch of the world’s first cryptocurrency exchange backed by a financial institution here in Singapore represents a clear vote of confidence that digital assets do indeed have utility as an investment mechanism,” said James Gillingham, CEO of Finxflo, decentralized finance platform and cryptocurrency brokerage firm.

Gillingham foresees a possibility of more bank/crypto exchange tie-ups in the near future.

“For example, existing crypto exchanges are able to share some of their innovative tech solutions such as aggregating algorithms or white label APIs, as well as their market insights given their wider and longer exposure to crypto-trading. On the other hand, traditional financial institutions can also lend their expertise on building class-leading platforms that are secure and compliant with national regulations,” he commented.

iSTOX, a multi-asset digitized securities platform backed by SGX and Temasek’s subsidiary Heliconia Capital, also welcomed the digital exchange.

“The move enhances the ecosystem for security tokens and positions Singapore as the premier global hub for digitised securities. With increasing adoption globally, we expect to see more institutional players turning to digitised securities as their primary mode of issuing new equity and bonds, and more investors building portfolios that consist of diversified digitised investment products,” said Choo Oi Yee, chief commercial officer of iSTOX.