Singapore’s largest bank DBS backs crypto despite market slowdown

Singapore’s biggest bank plans to boost its cryptocurrency and digital assets business despite the crypto bear market, saying it wants to expand its digital exchange and offer services to more of its 300,000 wealthy customers in Asia.

Piyush Gupta, CEO of DBS since 2009, said the downturn in the crypto market proved that established and regulated financial institutions, rather than just start-ups, should offer products such as digital asset trading for retail investors.

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

Gupta said the bank has less than 1,000 members on the exchange but will soon offer the service to 300,000 of its affluent customers across Asia, including private banks, accredited investors, other exchanges and funds through its DBS mobile banking app.

The app would make the process less cumbersome and faster for clients as well as allowing DBS to offer it to more customers, he said. DBS had total assets of US$686 billion ($488 billion) as of December 2021.

The former Citibank chief, who has served in senior banking roles across Asia, said DBS needed to support Singapore’s push for cutting-edge financial technology. “People look to us to be a pioneer in space and continue to push boundaries,” he said in an interview with the Financial Times.

The plans by DBS, in which state investment group Temasek has a stake of just under 30 percent, come as Singapore grapples with its messaging about its bid to be a crypto hub. The city-state, whose economy depends on financial services and trade, believes it must innovate to remain relevant.

But this year’s collapse of several high-profile crypto groups, including Singapore-based Three Arrows and Terraform Labs, as well as falling valuations globally have raised questions about MAS’s strategy.

In response, MAS chief executive Ravi Menon said last week that the regulator would take steps to protect retail investors while reaffirming the city’s digital asset strategy.

Gupta described the challenges facing the country’s regulators. “On the one hand, we want to be a global crypto hub. On the other hand, we’re also very concerned about our domestic population getting burned with this speculative asset class,” he said.

Gupta said losses incurred by retail investors in the crypto crash underscored the importance of more established financial institutions offering digital asset services. The total number of trades on the DBS Digital Exchange has more than doubled from April to the end of June, while the amount of bitcoin bought on the exchange has increased almost fourfold. Similarly, the amount of ether, another popular symbol, has increased by 65 percent in the same period.

“We have been very deliberate about who we have brought in. My view is that we can do this for retail investors, but regulators don’t necessarily see it that way, he said.

About $1 billion had flowed out of DBS and into global crypto exchanges run by companies including Genesis and Binance before the bank launched its own exchange, Gupta said. Entrusting companies like DBS, which can put in “guardrails” and protections, will lead to “better outcomes”, he added.

“You might as well try to create frameworks and processes to make these reasonably accessible to everyone instead of having a regulated space and a cowboy space and letting everyone go to the cowboy space.”

Analysts warned that no regulator can protect against market risk. “In truth, crypto is very volatile and fundamentally it has to come down to people who understand the risks,” said Nizam Ismail, founder of Singapore-based Ethikom Consultancy, which advises companies on compliance, adding that many banks had failed to do it. .

Hypothetically, DBS could be safer for retail investors looking to trade cryptocurrencies, but it was difficult to judge, he added.

“What we really need is some kind of check or driver’s license to ensure [retail investors] understand the risks. It does not exist,” said Zennon Kapron, director of Kapronasia, a financial technology research and consulting group. “Whether it comes from banks like DBS is another question.”