DBS Bank, a financial institution in Singapore, will introduce structured notes and over-the-counter (OTC) crypto options trading to its institutional clients in Q4 2024.
The bank declared on September 17 that it would persist in providing financial products contingent upon the prices of Bitcoin and Ether, the two largest digital assets by market capitalization.
DBS stated that clients who desire exposure to these crypto assets will be able to engage in them through structured notes and options trading beginning in the fourth quarter of 2024.
The prices of the fundamental cryptocurrencies determine the value of a crypto options contract. Investors participate in “hedging” based on the price volatility of the assets. The contract enables merchants to purchase or sell the assets at a predetermined time and date.
Financial institutions like banks also issue structured notes as debt security. Its return is also contingent upon the fundamental assets.
Hedging against market volatility
Different options structures are available to clients who custody their BTC and ETH with DBS to mitigate their positions against market volatility, according to DBS.
Clients who are interested in managing the volatility of crypto assets may acquire a put option. This enables the client to sell Bitcoin at a predetermined price at a future date, regardless of whether the price of Bitcoin falls below the predetermined price at the designated date.
Jacky Tai, the director of trading and structuring at DBS Group, stated that professional investors are continuing to increase their allocations to digital assets in their portfolios. Tai noted that this action broadens the company’s digital asset exposure offerings to clients.
Tai further stated, “Our clients now have an alternative channel to incorporate advanced investment strategies and build exposure to the asset class to better manage their digital asset portfolios.”
DBS Bank continues to implement Web3 infrastructure
DBS Bank has been steadily integrating Web3 infrastructure. The bank initiated a pilot on August 13, which involved the introduction of DBS Treasury Tokens on a permissioned, EVM-compatible blockchain. The initiative aims to improve corporate liquidity management in numerous markets.
The bank disclosed on August 22 that it had implemented blockchain technology in an additional pilot program to optimize the distribution of government grants. DBS stated that the pilot exemplified the potential of blockchain-based grants to enhance governance and increase efficiency.
Singapore is at the forefront of the adoption index due to its supportive banking system.
Henley & Partners, an investment migration consultancy firm, recently conducted a study that ranked Singapore as the top country in the world due to its numerous crypto developments. The nation scored highly in economic factors, regulatory developments, and technology.
Singapore has surpassed other jurisdictions, including the United States, the United Arab Emirates, and Hong Kong. The researchers observed that the country promotes adoption through its regulations, investments, and supportive banking system.
