The chief of Singapore headquartered DBS Bank — Southeast Asia’s largest lender — says the bank’s digital exchange did as much as S$180 million (US$133 million) of trading in the second quarter of 2021, and that it held about S$130 to S$140 million of digital assets under custody. The bank was one of the first traditional lenders in the region to launch its own digital exchange.
“I’m quite pleased, it is going quite well,” said DBS chief executive Piyush Gupta in response to a question on the DBS Digital Exchange during the bank’s second-quarter 2021 financial results briefing to analysts.
Gupta said his target was to grow the digital exchange’s investor base to about 1,000 customers this year from “a tad under 400” currently.
In April, DBS reported that its digital exchange, which launched in December 2020, had an investor base numbering around 120 and more than S$80 million of digital assets under custody.
By comparison, Nasdaq-listed Coinbase — the largest cryptocurrency exchange in the United States by trading volume — reported a trading volume of US$335 billion in the first quarter of 2021 (it is due to report its second-quarter earnings on Aug. 10). But unlike Coinbase or Binance, which are open to retail investors, DBS’s digital exchange is available only to accredited investors and institutional investors, and trading takes place only during Asian trading hours.
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Gupta said DBS intended to extend the digital exchange’s trading hours to 24/7 by September or October.
“We started off with an exchange which operated in the Asian time zone, [but] a large part of this activity actually happens outside the Asian time zone,” he said. “So once we do that, I expect the volume of activity to pick up a lot more.”
The DBS Digital Exchange facilitates spot trading between four fiat currencies — Singapore dollars, U.S. dollars, Hong Kong dollars and Japanese yen — and four cryptocurrencies — Bitcoin, Ethereum, Bitcoin Cash and XRP — and is integrated with an institutional-grade digital custody service for those assets.
The bank says it intends to scale the digital exchange by issuing securities tokens. In June, DBS listed its first securities token offering — a S$15 million digital bond — on its digital exchange.
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DBS said in its results briefing today that it had generated a record first-half 2021 net profit of S$3.71 billion (US$2.75 billion), up 54% from a year ago, lifted by strong growth in fee income. DBS’s second-quarter net profit was S$1.70 billion (US$1.26), a 37% increase from a year ago. First-quarter and second-quarter net profit were the two highest on record.
The bank expects to emerge stronger from the Covid-19 pandemic, with initiatives including new businesses such as the exchange, Partior, Climate Impact X, Muzinich Fund and Evolution X, expected to bring in revenues of about S$350 million next year, an increase of around S$200 million from this year.
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In May, DBS, Singapore Exchange, Standard Chartered Bank and Singapore state-owned investment firm Temasek announced that they were partnering to develop Climate Impact X, a carbon exchange and marketplace, to provide companies with high-quality carbon credits. Climate Impact X will use satellite monitoring, machine learning and blockchain technology to enhance the transparency, integrity and quality of carbon credits, a statement said.
Last month, DBS and Temasek said that they had jointly established a US$500 million growth-stage debt financing platform named EvolutionX Debt Capital to provide financing to growth-stage technology companies across Asia, with a focus on China, India and Southeast Asia.
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