Singapore’s DBS Bank will launch over-the-counter (OTC) crypto options trading and structured notes for its institutional clients.
On Sept. 17, the bank announced that it would continue to offer financial products linked to the price of Bitcoin (BTC) and Ether (ETH), the two biggest digital assets by market cap.
DBS said that starting in the fourth quarter of 2024, clients who want exposure to these crypto assets can invest in the assets through options trading and structured notes.
A crypto options contract derives its value from the prices of underlying cryptocurrencies. Here, investors engage in “hedging” on the price volatility of the assets. The contract allows traders to buy or sell the assets at an agreed time and date.
Meanwhile, a structured note is a type of debt security issued by financial institutions like banks. Its return is also based on underlying assets.
Hedging positions against market volatility
According to DBS, clients who custody their BTC and ETH with DBS can hedge their positions against market volatility using different options structures.
Clients seeking to manage the volatility of crypto assets can buy a put option. This allows the client to sell Bitcoin at a fixed price at a future date, even if Bitcoin prices fall below the fixed price at the set date.
The DBS group head of trading and structuring, Jacky Tai, said that professional investors continue to increase their allocations to digital assets in their portfolios. Tai said this move expands the company’s digital asset exposure offerings to clients.
“Now, our clients have an alternative channel to build exposure to the asset class and incorporate advanced investment strategies to better manage their digital asset portfolios,” Tai added.
DBS Bank continues to adopt Web3 infrastructure
DBS Bank has been increasingly diving into adopting Web3 infrastructure. On Aug. 13, the bank launched a pilot, introducing DBS Treasury Tokens on a permissioned, EVM-compatible blockchain. The move aims to enhance corporate liquidity management in multiple markets.
On Aug. 22, the bank announced that it had integrated blockchain technology into another pilot to streamline the distribution of government grants. DBS said the pilot demonstrated that blockchain-based grants can improve efficiency and enhance governance.
Supportive banking system puts Singapore at top of adoption index
With many crypto developments in the country, Singapore held the top spot in a recent study made by investment migration consultancy firm Henley & Partners. The country scored high in criteria like economic factors, regulatory developments and technology.
Singapore has surpassed other jurisdictions, such as Hong Kong, the United Arab Emirates and the United States. The researchers noted that the country fosters adoption through its regulations, supportive banking system and investments.
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