DBS exchange sees Bitcoin trading volume jump 80% in 2022 despite crypto winter

DBS likely benefitted from a flight to safety after the implosion of crypto darlings like Sam Bankman-Fried’s FTX exchange. PHOTO: BLOOMBERG

SINGAPORE – DBS Group Holdings saw a surge in Bitcoin traded on its digital exchange in 2022 even as a crypto winter gripped the market amid a spate of high-profile company collapses, rising interest rates and lower risk appetite.

Singapore’s largest bank said on Wednesday that the amount of Bitcoin that changed hands on the DBS Digital Exchange jumped 80 per cent compared with 2021.

Bitcoin custodised, or stored securely, with the bank’s digital asset custody solution also doubled in the same period.

This comes even as the world’s largest digital coin by market capitalisation lost over 60 per cent of its value in 2022, while the wider crypto market shrunk by US$2 trillion (S$2.7 trillion).

Bitcoin traded at $29,475 as at 12.45pm on Wednesday – a far cry from its peak of over $90,000 in November 2021.

DBS likely benefited from a flight to safety after the implosion of crypto darlings like hedge fund Three Arrows Capital and Sam Bankman-Fried’s FTX exchange.

DBS Digital Exchange chief executive Lionel Lim said: “We believe 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, we offer many unique advantages that investors have come to appreciate as they seek reliable gateways to access the digital asset economy.”

The exchange’s customer base doubled in 2022 and had close to 1,200 registered participants as at Dec 31.

Launched in December 2020, DBS Digital Exchange is a members-only exchange for institutional and accredited investors.

The bank said it did not observe any major sell-offs in 2022 and the exchange’s customers had a net-buy position throughout the second half of the year.

“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,” said Mr Lim.

The amount of Ether traded on the exchange also surged 65 per cent in 2022, while the amount custodised grew over 60 per cent.

DBS holds all custodised digital assets separately within the bank using institutional-grade cold wallets, which are not connected to the Internet.

The exchange itself does not store any custodised assets, said the bank, adding that it checks the purity of all digital assets entering its custody.

DBS has also been expanding its footprint in the digital assets space.

It said on Monday that it plans to apply for a licence that allows it to offer crypto trading services to Hong Kong customers as the city pushes to become a hub for digital assets.

In September, the bank enabled its accredited investor customers to access the DBS Digital Exchange’s trading solutions via its digibank app.

The exchange also made two more cryptocurrencies – Polkadot and Cardano – available for spot trading in the following month, bringing the total to six.

Mr Lim also said that the exchange’s corporate clients’ interest in security token offerings (STOs) grew in 2022.

STOs allow companies to raise funds through digital tokens that represent stakes in an asset, such as stocks or bonds.

Said Mr Lim: “We were actively working towards converting a number of enquiries into STOs.

“However, these were put on hold given the market volatility as well as macroeconomic uncertainty.

“We will continue to work with these potential issuers as well as explore origination opportunities for high-quality STO listings in 2023.”

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