DBS Bank, a financial institution in Singapore, has disclosed its intention to provide its institutional clients with over-the-counter (OTC) crypto options trading and structured notes.
In a press release issued on Tuesday, the company announced that it will offer institutional investors more advanced tools to facilitate their access to major cryptocurrencies, including Bitcoin and Ether, which are the two most significant digital assets by market capitalization.
The announcement stated that it is the first Asian-headquartered bank to provide financial products whose value is contingent upon the price of Bitcoin and Ethereum.
Investors to Get Access to Crypto Options in Q4
The fourth quarter of 2024 will allow institutional clients to invest in structured notes and options trading to gain exposure to the crypto market.
Crypto options trading entails contracts that derive their value from the underlying price of cryptocurrencies, enabling investors to protect themselves against the inherent volatility of digital assets.
Traders can enter into these contracts to purchase or sell assets at a predetermined price at a future date.
In the interim, structured notes are debt securities that financial institutions issue. The returns of these securities are contingent upon the performance of underlying assets, such as cryptocurrencies.
By employing a variety of options structures, DBS Bank’s offering will allow clients to protect their positions in Bitcoin and Ether.
For instance, investors may acquire a put option, which enables them to sell Bitcoin at a predetermined price at a future date, regardless of whether market prices fall below that threshold. This safeguards against potential losses.
Jacky Tai, the director of trading and structuring at DBS Group, stated in a comment that professional investors are consistently diversifying their portfolios to include digital assets.
“This new service provides them an additional avenue to increase their exposure and implement sophisticated portfolio management strategies.”
DBS Bank Enhances Crypto Offerings
Part of the bank’s over-the-counter (OTC) crypto options trading strategy is to broaden its digital asset services.
DBS has been actively incorporating Web3 technologies and investigating blockchain-based solutions to improve its financial services.
In August 2024, DBS Bank launched a blockchain-based treasury and liquidity management solution in collaboration with digital payment provider Ant International.
Ant International intends to implement the DBS Treasury Tokens, which operate on DBS’s permissioned blockchain.
Instant and multicurrency treasury and liquidity management are enabled by this blockchain, which is expressly engineered to accommodate DBS entities in various markets.
DBS has designed its blockchain to be compatible with the Ethereum Virtual Machine (EVM), a widely used framework that facilitates the execution of smart contracts.
Ant International’s Whale treasury management platform has also been integrated with DBS’s blockchain.
Additionally, the bank implemented blockchain technology in a distinct pilot program to optimize the distribution of government grants.
The initiative will involve the bank’s collaboration with the Singapore Fintech Association (SFA) and Enterprise Singapore (EnterpriseSG).
The Monetary Authority of Singapore (MAS) is leading a multi-year initiative, Project Orchid, designed to establish a digital Singapore dollar infrastructure. DBS’s participation in this project is a continuation of this initiative.