DBS Bank tapping on tokenized bonds as a new way to invest

DBS Bank, Southeast Asia’s largest lender by assets, launched this week its first security token offering (STO) — a S$15 million (US$11 million) digital bond issuance — on its DBS digital exchange. 

The issuance by the Singapore-based bank is a milestone in its “asset digitalization strategy” as it taps into the growing trend of asset tokenization and expands the offerings on its DBS digital exchange. 

An STO involves the issuance of digital tokens in the form of regulated securities using blockchain technology. The token is a digital representation of a real-world asset and can include ownership of assets such as gold or real estate or economic rights such as a share of profits.

DBS’ inaugural STO involved the issuance of a fixed income token for a privately placed DBS bond with a six-month tenor and coupon rate of 0.60% per annum, with coupons paid in cash into each investor’s account. The issuance, which was fully subscribed, provides a model for other companies to raise capital through the tokenization of their securities and assets.

“We expect asset tokenization to increasingly become more mainstream as more of our clients start to embrace security token issuance as part of their capital fundraising exercise, which we believe will boost Singapore’s ambitions to be a digital asset hub in Asia,” said Eng-Kwok Seat Moey, DBS’ group head of capital markets, in a statement.

Launched in December, the DBS digital exchange leverages blockchain technology to provide tokenization, trading and a custody ecosystem for digital assets. The platform currently facilitates spot trading between four fiat currencies (SGD, USD, HKD and JPY) and four cryptocurrencies — Bitcoin, Ethereum, Bitcoin Cash and XRP. The bank has said that it intends to scale its digital exchange business through the issuance of security tokens.

Source : forkast.news