Singapore’s DBS Bank Announces First Security Token Offerings

Singapore's DBS Bank issues the first-ever security token offerings with blockchain.

Singapore's DBS Bank has recently announced the first security token offerings of approximately US$15 million or US$11 million worth of digital bonds. This digital bond has the potential to grow the popularity of the asset tokenization on the DBS Digital Exchange (DDEx) that leverages blockchain technology for dealing with digital assets. The digital bond has come with a six-month tenor with a coupon rate of 0.60% per annum. It will soon be available for secondary trading to clients of the DDEx platform. DBS Bank has also initiated crypto-trust, offering investment management service with different cryptocurrencies— Bitcoin, Ethereum, Ripple as well as Bitcoin Cash.

The digital asset exchange has three aspects— cryptocurrency, security token platform, and digital asset custody. The security token offerings have targeted unlisted stocks, bonds as well as private equity funds. This advanced process ensures cost-effectiveness for the promotion of smaller issuances and transactions. The security token offerings are a type of public offering where the tokens can be utilized for trading equities, fixed income, and many more. DBS Bank has mentioned that around US$60 million of digital assets are present in the custody.

Asset tokenization is transforming physical asset management into a digital process by leveraging blockchain technology for better transparency. The digital assets consist of better access rights, managed by a smart contract also an underlying distributed ledger. Open-source blockchain technology has reduced potential risks and costs for investors in the digital world. The decentralized and distributed ledger records the provenance of digital assets that are distributed instead of transferred with real-time data transparency.

Various trending reasons are attracting banks and investors towards digital assets by trading cryptocurrencies— no geographical barrier, no presence of middlemen, small percentage ownerships, enhanced liquidity, and rapid hassle-free transactions. Tokens can be of different types such as real estate, commodities, private equity shares, and many more. Though there are some potential challenges in blockchain technology like informal framework, without any presence of authority and cyberattacks, investors have started preferring the use of blockchain technology to deal with heavy assets.