Gunnar Jaerv is the chief operating officer of Hong Kong-based crypto custodian, First Digital Trust. He spoke to Blockchain Asset Review on his views on DBS’s new crypto exchange.
1. What does it signify that Southeast Asia’s biggest bank is opening a digital exchange?
This is a huge indicator that regulators in Singapore have confidence in digital assets. More financial institutions are becoming more open to non-traditional financial assets that will increase value for its citizens and increase Singapore’s position as a global tech hub. Furthermore, this influences other neighbouring regulators to work together and eventually find common ground on digital assets.
2. Who would be their clients? Are they those based in China and SouthEast Asia?
Their clientele would likely be professional investors who no longer need to go to small OTC desks. It’s enabling exposure to crypto from a trusted partner, so many of the clients could be existing clients of DBS. They will have priority over using the digital exchange services. DBS has also mentioned their platform will only be open to institutions and elite retail investors.
3. What about the licensing regime? Would they face the same regulations that faced BitMEX or is it different?
DBS is already licensed, so this will either be a regulated sandbox or pilot. BitMEX was basically a random exchange who didn’t abide by regulations. DBS on the other hand is ranked one of the top fintech players in banking in Singapore. The professionalism is much more prominent. It’s less like the wild west.
4. Does DBS’s digital exchange mean that digital assets are finally becoming mainstream?
It is definitely getting to a point where there is less hesitation from players to hold and invest in digital assets. It’s no longer something happening behind the scenes or in some shady way. This is an indication that digital assets are becoming legimitized. We’ve seen major players like PayPal, Square, MicroStrategy all investing in or accepting crypto, This is creating more awareness about the great potential of crypto.
5. What are some of the risks they would face? Would they be able to recover in case of thefts or breakdowns in the system?
The same risks apply to them operating a bank. They need to follow the rules and regulations and cannot take shortcuts. We assume DBS has invested time and thoughts into keeping their clients’ assets safe. You always have the same issues with other major exchanges, such as technical difficulties, or how those orders are moved. Their teams would need to understand the ins and outs of building the correct infrastructure for a digital asset exchange. It will be interesting to see the operating and procedural rules and how they mitigate those risks.
6. Finally, who are they competing against? Why are they getting into the business at this stage?
I think it might not be their sole intention to compete, but to maintain their customer base. DBS has grown a lot and I can only imagine their clients are interested in buying crypto. It’s all about providing a holistic service to clients. Other exchanges like Binance and Huobi are different. DBS are being innovative whether their clients want to buy crypto or stocks, bonds, or funds. And they’re only opening it up right now to professional investors.