Singapore-based DBS Bank has announced plans to offer over-the-counter (OTC) crypto options trading and structured notes to its institutional clients, marking a significant expansion of its digital asset services. Starting in the fourth quarter of 2024, this new service will allow institutional investors to gain exposure to major cryptocurrencies like Bitcoin and Ether, providing them with advanced tools to manage their portfolios.
DBS Bank’s Crypto Offering
DBS Bank, the first Asia-based bank to offer financial products linked to Bitcoin and Ethereum, revealed in a press release on Tuesday that institutional investors would soon have access to crypto options trading and structured notes. These products will allow professional investors to better manage the volatility of digital assets by offering more sophisticated strategies for gaining crypto exposure.
Crypto options trading involves contracts whose value is based on the price of cryptocurrencies, enabling investors to hedge their investments against market volatility. These contracts provide the opportunity to buy or sell assets at a predetermined price on a future date, protecting against potential losses.
In addition to options trading, DBS will offer structured notes, a type of debt security issued by financial institutions. These notes are tied to the performance of underlying assets, such as cryptocurrencies, and provide a way for investors to benefit from price movements in the crypto market.
For instance, investors can purchase put options to sell Bitcoin at a set price on a specific date, regardless of whether the market price falls below that level. This strategy helps shield investors from the potential downside of holding volatile assets like Bitcoin.
Institutional Investors to Gain Crypto Exposure in Q4 2024
The new offering from DBS will be available in the fourth quarter of 2024, giving institutional clients an additional avenue to diversify their portfolios with digital assets. DBS Group’s Head of Trading and Structuring, Jacky Tai, emphasized the growing demand from professional investors for digital asset exposure, stating that this new service offers investors more advanced strategies to manage their investments.
This move is part of DBS’s broader initiative to cater to the increasing interest in digital assets from institutional investors, who are continuously expanding their portfolios to include cryptocurrencies like Bitcoin and Ether.
Expanding DBS’s Digital Asset Services
DBS Bank’s foray into OTC crypto options trading is part of its larger digital asset strategy. The bank has been actively incorporating blockchain and Web3 technologies into its operations. In August 2024, DBS partnered with Ant International to launch a blockchain-based treasury and liquidity management solution. The collaboration involved the creation of DBS Treasury Tokens, which operate on DBS’s permissioned blockchain and cater to entities across various markets. This platform allows for instant and multicurrency liquidity management.
The bank’s blockchain is compatible with the Ethereum Virtual Machine (EVM), allowing for the execution of smart contracts. DBS has also integrated its blockchain into Ant International’s Whale platform, enabling seamless treasury management.
In addition to its partnership with Ant International, DBS is involved in a pilot program that uses blockchain technology to streamline the distribution of government grants. This project, in collaboration with Enterprise Singapore (EnterpriseSG) and the Singapore Fintech Association (SFA), is an extension of DBS’s role in Project Orchid, a multi-year initiative by the Monetary Authority of Singapore (MAS) aimed at developing infrastructure for a digital Singapore dollar.
Conclusion
DBS Bank’s decision to offer OTC crypto options trading and structured notes for institutional investors represents a significant step in the bank’s digital asset journey. By providing advanced financial tools tied to Bitcoin and Ether, DBS is meeting the growing demand for cryptocurrency exposure among professional investors, while simultaneously expanding its blockchain and Web3 offerings to enhance its financial services.
