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Singapore’s DBS Bank to Launch OTC Crypto Options in Q4 2024

Photo for the Article - Singapore's DBS Bank to Launch OTC Crypto Options in Q4 2024

DBS Bank, a Singaporean multinational banking and financial services corporation, announced that it will offer over-the-counter (OTC) crypto options and structured notes for its institutional investors in the fourth quarter of the year, focusing on bitcoin ($BTC) and ether ($ETH).

Whatโ€™s the significance: DBS Bank’s launch of crypto trading options enhances financial inclusion by offering institutions advanced tools to be exposed to the crypto market.

Key details: 

  • Products to be offered: In a September 17 announcement, the bank said that it would offer financial products linked to the price of $BTC and $ETH, the two largest cryptocurrencies by market cap.ย 
  • Options for investors: There will be two options that institutional investors can offer:
    • OTC crypto options contract, which derives its value from the prices of the supported tokens. Basically, DBS Bank allows investors to take strategic positions or enter into specific financial contracts to minimize potential losses or risks, known as hedging.ย 
    • Structured note, a type of debt security issued by financial institutions like banks. Its return is also based on underlying assets.
  • Example: If a client wants to manage the volatility of crypto assets, they can buy a put option, allowing them to sell $BTC at a fixed price at a future date, even if the assetโ€™s price falls below the fixed price at the set date.ย 

The Big Picture: According to Jacky Tai, head of trading and structuring of DBS Group, professional investors should continue to increase their allocations to digital assets in their portfolios.

  • He then said that this is DBS Bankโ€™s move for this call, as the financial institution will help them incorporate advanced strategies for them to manage their digital asset portfolios.
  • Tai further emphasized that their initiative expands the companyโ€™s digital asset exposure offerings to clients.ย 

โ€œThis is in line with DBSโ€™ value proposition to provide eligible clients with trusted institutional-grade access to the digital asset ecosystem.โ€

Jacky Tai, Head of Trading and Structuring, DBS Group

Zoom Out: This is not the first time that the DBS Bank has adopted blockchain technology. 

  • On August 13, the bank launched a pilot test of DBS Treasury Tokens on a permissioned, EVM-compatible blockchain.
    • This move aims to enhance corporate liquidity management in multiple markets, according to the bank.
  • On August 22, the bank announced that it had integrated blockchain technology into another pilot to streamline the distribution of government grants.
    • Blockchain-based grants like this can improve efficiency and enhance governance, Cointelegraph reported.
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Bottom line: DBS Bankโ€™s initiative plays a major role in promoting the Singapore as one of the central hubs for crypto in Asia. 

  • In a recent Henley Crypto Adoption Index 2024 report, the research explained that Singapore surpassed other countries such as Hong Kong, the United Arab Emirates, and the United States, because the ASEAN country fosters adoption through its regulations, supportive banking system, and investments

This article is published on BitPinas:ย Singapore’s DBS Bank to Launch OTC Crypto Options in Q4 2024

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