DBS, a Singapore-based consumer bank, reported positive figures in the number of market participants and the amount of cryptocurrency being custodised on its digital exchange, despite the looming market volatility.
While the market is typically associated with declining value and volatility, DBS’s figures show that the number of market participants and the amounts being parked in the DBS digital exchange (DDEx) are both growing positively.
According to reports, DBS saw an 80 per cent year-on-year growth in the number of Bitcoin trades on the DDEx in 2022, while also noting a similar 65 per cent increase in the number of Ethereum trades.
DBS’s digital asset custody solution doubled the amount of Bitcoin being custodised during this period and grew the number of Ethereum being custodised by over 60 per cent.
This is in view of the bank doubling its DDEx customer base during 2022, now including close to 1,200 registered exchange participants; as of 31 December last year.
Weathering the storm
Cryptocurrency’s volatility was last year’s worst-kept secret, with users around the globe feeling the full force of ‘capital at risk’ during 2022; accentuated by the astonishing collapse of FTX.
Yet if anything, these figures from DBS appear to show that the market volatility has had little effect on the confidence of Singapore investors, who have come increasingly attracted to the regulated and secure trading environment offered by DBS.
In late September, the bank began to experiment with broadening access to the DDEx with its self-directed cryptocurrency trading feature, while in October, DDEx availed cryptocurrency trading for Polkadot (DOT) and Cardano (ADA), bringing the total number of cryptocurrencies available for spot trading to six – in addition to BTC, ETH, Bitcoin Cash (BCH) and XRP.
Then by November last year, the bank successfully tested the trading of tokenised government bonds and other digital assets on the blockchain.
While these actions demonstrated the reliability of DDEx, they also presented the bank’s active participation in best market practices. In this way, the exchange itself does not hold any of its custodised assets, but rather, places all digital assets separately inside institutional-grade cold wallets.
In addition to this, the bank also conducts coin purity checks on all digital assets entering its custody and remains compliant with anti-money laundering (AML) and know-your-customer (KYC) standards.
“Since inception in 2020, we have taken a prudent and measured approach towards developing our digital asset ecosystem, choosing to keep pace with the market as it matures and as investors become more sophisticated,” explains Lionel Lim, CEO of the DDEx.
Lim shares his belief that the market has “decisively shifted its focus towards trust and stability, especially in the wake of multiple scandals that have rocked the industry.”
“As a regulated digital exchange backed by the DBS Group,” he continues, “we offer many unique advantages that investors have come to appreciate as they seek reliable gateways to access the digital asset economy.”
DDEx continues to be a members-only exchange serving corporate and institutional investors, accredited investors and family offices, who are generally better able to manage market risks.
Consequently, DBS did not observe any major selloffs in 2022, with DDEx observing a net-buy position for its customers throughout the second half of the year.
Commenting on opportunities in the security token offering (STO) space, Lim reveals that in 2022, the bank experienced “growing interest from our corporate clients and was actively working towards converting a number of enquiries into STOs.”
However, the market volatility as well as macroeconomic uncertainty ultimately caused DBS to put its operations in STOs on hold. “We will continue to work with these potential issuers as well as explore origination opportunities for high-quality STO listings in 2023,” confirms Lim.