The ongoing cryptocurrency wave is quite different from those seen earlier, most notably in 2017, where the prices of crypto tokens also rose by quite a large amount in a short span of time. While the scale at which prices have increased since the beginning of 2020 is certainly unprecedented, there is another factor behind this demand which is arguably the most important reason for all the positive sentiment around cryptocurrencies, which is the acceptance of crypto by large banks and financial institutions.
Previously, cryptocurrencies were viewed with suspicion and distrust by financial institutions, especially as they were touted as replacements for fiat currencies. However, the current situation is demonstrating how crypto can co-exist in the financial system, and the potential rewards and growth are drawing more and more banks into this market.
Several of the biggest financial institutions in the world have announced plans to invest in cryptocurrencies, while asset managers are also launching funds to make crypto accessible to their investors. In this vein, it is exciting to see that DBS Private Bank has now launched the first bank-backed trust fund in Asia for cryptocurrencies.
This initiative is aimed to allow private bank clients to invest, manage and customize their crypto assets in a safe and structured manner. This follows the launch of the DBS Digital Exchange, which was launched in December 2020, and it will help create a trading, tokenization, and custody ecosystem for digital assets. This fund will only be applicable for the cryptocurrencies currently hosted on the exchange – Bitcoin, Ether, Bitcoin Cash, and XRP.
This represents another big step forward for the cryptocurrency industry in terms of entering the mainstream financial sector. We have already seen how crypto is making a difference in various sectors and industries all over the world, especially digital sectors, with the online gambling industry being the perfect example of this.
Over the past year, several online casino operators, like online casino Winz, have begun to offer their customers the option to place bets via cryptocurrencies, and this has proved to be wildly successful, changing the way the industry operates and increasing demand by a big margin. It is a similar story across various other industries, and given the demand for cryptocurrencies that we can already see in the market, the launch and availability of funds like this will only help improve the prospects of various crypto tokens.
DBS has also followed in the footsteps of JPMorgan Chase and Temasek in creating a blockchain payments platform, while the likes of the UBS Group, Morgan Stanley and Goldman Sachs are all working on plans to offer crypto investments to their clients.
The demand for structured and safe vehicles to invest in crypto can also be seen through the progress made by DBS’s digital exchange since its launch – as of the first quarter of 2021, the exchange had $80 million in assets under custody, with trading volumes of $30-$40 million. There are 120 clients on board already, with many more having applied to get on the platform, and the launch of this fund will increase demand even more. DBS has also said that the exchange is working to expand its operating hours from Asian time zones to around the clock, while it has also recently launched its first security token offering (STO).
The DBS Digital Bond is priced at 15 million Singapore dollars (around US$11.37 million), has a six-month tenor and a coupon rate of 0.60% per annum.
These efforts show how digital assets and cryptocurrencies are becoming a bigger part of mainstream financial markets, and the demand for better trading and investment solutions is only going to increase as time passes and these assets become more valuable.
