Singapore’s largest bank plans to grow its cryptocurrency and digital asset business despite the crypto bear market, saying it wants to expand its digital exchange and offer services to its more than 300,000 wealthy customers by Asia.
Piyush Gupta, managing director 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 to consumers. retail investors.
Last year, the bank’s brokerage arm received a cryptocurrency license from the Monetary Authority of Singapore, allowing its institutional and high-net-worth clients access to its 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 high net worth clients across Asia, including private banks, accredited investors, other exchanges and funds via its DBS mobile banking application.
The app would make the process less cumbersome and faster for customers, and allow DBS to offer it to more customers, he said. DBS had total assets of S$686 billion (US$488 billion) as of December 2021.
The former Citibank executive, who has held senior banking positions in Asia, said DBS should support Singapore’s push towards cutting-edge financial technology. “People expect us to be a pioneer in the field and to keep pushing the boundaries,” he said in an interview with the Financial Times.
The plans for DBS, in which state investment group Temasek has a stake of just under 30%, come as Singapore grapples with its messaging over its bid to be a crypto hub. The city-state, whose economy is based on financial services and trade, believes it must innovate to stay relevant.
But the collapse this year of several top crypto groups, including Singapore-based Three Arrows and Terraform Labs, in addition to plummeting valuations globally, has raised questions about MAS’ strategy.
In response, MAS chief executive Ravi Menon said last week that the regulator would take action to protect retail investors while affirming the city’s digital asset strategy.
Gupta described the challenges faced by regulators in the country. “On the one hand, we want to be a global crypto hub. On the other hand, we are also very worried that our domestic population will get burned with this speculative asset class,” he said.
Gupta said the losses suffered by retail investors in the crypto crash underscored the importance of more established financial institutions offering digital asset services. The total number of transactions on DBS Digital Exchange more than doubled from April to the end of June, while the amount of bitcoin purchased on the exchange nearly quadrupled. Similarly, the amount of ether, another popular token, increased by 65% over the same period.
“We were judicious about the people we recruited. I think we can do that for retail investors, but regulators don’t necessarily see it that way,” he said.
About $1 billion was transferred from DBS to global crypto exchanges run by companies such as Genesis and Binance before the bank launched its own exchange, Gupta said. Entrusting companies such as DBS, which could put in place “guardrails” and protections, would lead to “better results”, he added.
“You might as well try to create frameworks and processes to make it reasonably accessible to everyone instead of having a regulated space and a cowboy space and letting everyone go into the cowboy space. boy.”
Analysts have warned that no regulator can hedge against market risk. “Truly, crypto is very volatile and basically people need to understand the risk,” said Nizam Ismail, founder of Singapore-based Ethikom Consultancy, which advises companies on compliance, adding that many banks had failed to do so. .
In theory, DBS might be safer for retail investors wanting to trade cryptocurrencies, but it was hard to judge, he added.
“What we really need is some sort of check or driver’s license to make sure [retail investors] understand the risks. It doesn’t exist,” said Zennon Kapron, director of Kapronasia, a fintech research and advisory group. “Whether that comes from banks like DBS is another question.”