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Singapore’s banking giant, DBS Bank (NASDAQ: DBSDY), is positioning itself as the first Asian-headquartered bank to introduce digital currency options trading and structured notes for institutional investors. DBS Bank announced its new offering, which is designed for eligible institutional investors and accredited wealth clients, providing them with access to financial products whose value is directly linked to BTC and Ethereum prices—two of the largest digital currencies by market capitalization.
The move marks a major milestone in the traditional banking sector’s engagement with digital assets, with a launch set in the fourth quarter of 2024.
Expanding access to digital assets for wealth clients
Currently, DBS clients can already trade digital currencies and security tokens via the DBS Digital Exchange (DDEx). However, the upcoming launch will allow eligible clients to further diversify their portfolios by participating in over-the-counter (OTC) options trading and structured notes. This offering will enable investors to manage volatility, hedge their positions, and potentially earn yields.
Depending on the specific product structure and the price movements of underlying digital currencies, clients may either earn yield on their fiat holdings or opt to take delivery of the cryptocurrencies themselves. For instance, clients looking to hedge their exposure to BTC’s volatility can buy a put option, allowing them to sell BTC at a predetermined price in the future, regardless of potential price declines.
Hedging solutions for professional investors
DBS’ new financial products are aimed at professional investors increasingly integrating digital assets into their portfolios.
Jacky Tai, Group Head of Trading and Structuring at DBS’ Global Financial Markets, emphasized the significance of these offerings, stating, “Professional investors are increasingly allocating to digital assets in their portfolios. Underpinned by DBS’ strong credit ratings and longstanding expertise in structuring solutions, these financial products are an expansion of the bank’s value proposition to provide clients trusted institutional-grade access to the digital asset ecosystem.”
Tai further explained that the new channels will allow clients to adopt advanced investment strategies to better manage their digital asset portfolios. DBS’ foray into structured digital currency products is set to elevate the range of investment opportunities, enabling wealth clients to both capitalize on market movements and protect against price swings in volatile digital currencies like BTC and Ethereum.
Increasing interest in safe-haven digital asset platforms
The launch of these structured notes and options products coincides with rapid growth in the digital currency market. In the first five months of 2024, the market capitalization of digital currencies surged by approximately 50%.
Meanwhile, DBS reported that its digital asset trading platform, DDEx, saw nearly triple the value of assets traded in Singapore dollar terms compared to the same period in 2023.
DDEx’s user base also grew significantly, with a 36% increase in active trading clients, while the value of digital assets under DBS custodianship surged by over 80% in Singapore-dollar terms. The exchange has experienced a net inflow of client deposits, with many seeking the bank’s secure, institution-grade platform for digital asset custody and trading.
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