Singapore's DBS Bank Plans to Expand Its Crypto Business Amid Market Downturn

This article comes fromFT, original author: Mercedes Ruehl

Odaily Translator | Nian Yin Si Tang

Odaily Translator | Nian Yin Si Tang

Singapore's largest bank plans to expand its cryptocurrency and digital assets business despite a bear market in the cryptocurrency market. The bank said it wanted to expand its digital exchange and serve more of its 300,000 high-net-worth clients in Asia.

Piyush Gupta, chief executive of DBS Bank since 2009, said the downturn in the cryptocurrency market proved that established and regulated financial institutions, not just start-ups, should offer products such as digital asset trading to retail investors.

The bank's brokerage arm received a cryptocurrency license from the Monetary Authority of Singapore last year, allowing its institutional and high-net-worth clients invited access to the DBS Digital Exchange.

DBS, which has fewer than 1,000 members on the exchange, will soon offer the service through its mobile banking app to its 300,000 high-net-worth clients across Asia, including private banks, qualified Investors, other exchanges and funds.

The app would not only allow DBS to offer the service to more customers, but would also make the business process easier and faster, he said. As of December 2021, DBS had total assets of S$686 billion ($488 billion).

The former Citibank executive said DBS must support Singapore's foray into cutting-edge fintech. "We are expected to be a pioneer in the field and continue to push boundaries," he told the Financial Times.

Singaporean government investment group Temasek (Temasek) owns just under 30% of DBS, it is reported. DBS' plans come as Singapore struggles to send a message that it is trying to become a hub for cryptocurrencies. The city-state, whose economy depends on financial services and trade, believes it must innovate to stay relevant.

But this year, the collapse of several high-profile crypto firms, including Three Arrows Capital and Terraform Labs, and a plunge in global cryptocurrency market capitalization have raised questions about MAS' strategy.

In response, MAS managing director Ravi Menon said last week that the regulator will take steps to protect retail investors while affirming Singapore’s digital asset strategy.

Gupta described the challenges facing the country's regulators. “On the one hand, we want to be a global crypto center. On the other hand, we are also very concerned about our domestic population being harmed by this speculative asset.”

Gupta said the losses suffered by retail investors in the cryptocurrency crash underscored the importance of more established financial institutions servicing digital assets. From April to the end of June, the total number of transactions on DBS Digital Exchange more than doubled, while the amount of bitcoin purchased on the exchange nearly quadrupled. Additionally, the number of Ethereum purchases increased by 65% ​​during the same period.

"We've been cautious about the users that the platform attracts. My view is that we can do that for retail investors, but regulators don't necessarily see it that way."

Before DBS launched its own exchange, about $1 billion flowed out of the bank and into global cryptocurrency exchanges run by companies like Genesis and Binance, Gupta said. He added that entrusting firms such as DBS would lead to "better outcomes" because they could provide "guardrails" and protections.

“Instead of having a regulated space and a cowboy space and making everyone go to the latter, you might as well try to create frameworks and processes that everyone can use reasonably.”

Analysts warn that no regulator can protect against market risks. "The reality is that cryptocurrencies are very volatile and fundamentally it has to depend on people's understanding of risk," said Nizam Ismail, founder of Ethikom Consultancy, a Singapore-based consultancy that advises companies on compliance, adding that many Banks have failed to do this.

He further explained that it is assumed that DBS Bank may be safer for retail investors who want to trade cryptocurrencies, but the actual situation is still difficult to judge.