DBS Bank to Launch OTC Crypto Options Trading for Institutional Clients

Singapore’s DBS Bank has announced plans to offer over-the-counter (OTC) crypto options trading and structured notes for its institutional clients.

In a Tuesday press release , the company said it will provide institutional investors with more sophisticated tools to gain exposure to major cryptocurrencies like Bitcoin and Ether, the two largest digital assets by market capitalization.

“It is the first Asian-headquartered bank to offer financial products whose value is linked to the price of Bitcoin and Ethereum,” the announcement said.

Investors to Get Access to Crypto Options in Q4

Starting in the fourth quarter of 2024, institutional clients seeking exposure to the crypto market will have the opportunity to invest in options trading and structured notes.

Crypto options trading involves contracts that derive their value from the underlying price of cryptocurrencies, allowing investors to hedge against the inherent volatility of digital assets.

With these contracts, traders can agree to buy or sell assets at a pre-set price at a future date.

Meanwhile, structured notes are debt securities issued by financial institutions, with returns tied to the performance of underlying assets like cryptocurrencies.

DBS Bank’s offering will enable clients to hedge their positions in Bitcoin and Ether by utilizing various options structures.

For example, investors can purchase a put option, which allows them to sell Bitcoin at a predetermined price on a future date, even if market prices fall below that level, thus protecting against potential losses.

“Professional investors are continuously expanding their portfolios to include digital assets,” Jacky Tai, DBS Group’s head of trading and structuring, said in a comment.

“This new service gives them an additional channel to build exposure and incorporate advanced strategies for managing their portfolios.”

DBS Expands Crypto Offerings

The bank’s move into OTC crypto options trading is part of its broader strategy to expand its digital asset services.

DBS has been actively adopting Web3 technologies and exploring blockchain-based solutions to enhance its financial offerings.

In August 2024, DBS Bank partnered with digital payment provider Ant International to launch a blockchain-based treasury and liquidity management solution.

The DBS Treasury Tokens, which are set to be utilized by Ant International, operate on DBS’s permissioned blockchain.

This blockchain is specifically designed to cater to DBS entities across various markets, allowing for instant and multicurrency treasury and liquidity management.

DBS has built its blockchain to be compatible with the Ethereum Virtual Machine (EVM), a widely used framework that enables the execution of smart contracts.

Moreover, DBS’s blockchain has been integrated with Ant International’s treasury management platform, Whale.

The bank also integrated blockchain technology into a separate pilot program to streamline the distribution of government grants .

The bank will collaborate with Enterprise Singapore (EnterpriseSG) and the Singapore Fintech Association (SFA) as part of the project.

DBS’s involvement in this project is an extension of its participation in Project Orchid, a multi-year initiative led by the Monetary Authority of Singapore (MAS) aimed at developing the infrastructure for a digital Singapore dollar.