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- DBS Bank has introduced its first blockchain-based bond worth $11.3 million
- The latest bond came with a maturity period of six months with a 0.6% coupon rate
- The regulations established by Singapore has enabled to create of the structure of the digitalized token
- The band has offered a great opportunity to institutions to raise capital from bigger and flourishing capital market
DBS bank LTD is a private and largest bank offering digital banking services headquartered in Singapore. The bank currently operates in several countries in Asia, and is considered as one of the safest multinational bank of the region. On Monday, the DBS bank announced its launch of the first digital security offering on DBS Digital Exchange (DDEx). According to the announcement, the digital bond worth $11.3 million will come with a six-month maturity and a coupon rate of 0.6% per annum. The latest bond strictly adheres to the bond legal framework. Investors get the same legal protections over their rights as traditional bonds.
Why did DBS bank LTD digitize the bond?
According to the announcement, digitizing the bond helped the DBS bank to save substantial costs incurred at issuance and post-trade in the secondary market. Moreover, the private digital of Singapore mentioned that the bond would be traded in board lots to encourage more participants.
Notably, the newly issued bond will trade in $7,566 board lots. In contrast, the traditional bonds were traded at typical $1,89,159 board lots. Indeed, the reduction was made possible only with the help of blockchain technology.
With the listing of the latest tokenized bond on the digital exchange of DBS bank, the securities can now be traded among firms and accredited investors. However, such investors should be an applicable end client of members or members of DDEx of DBS Asia.
Singapore has the crypto regulatory solution
According to a report from a news outlet, The Straits Times, the financial crime rate in Singapore has been soaring for the last three years. In recent developments, police of Singapore recorded a crypto-related scam of more than $29 million. The figure includes about 400 records of such cases during the global pandemic.
Back in 2019, Singapore, which is also known as the digital hub, introduced the regulatory framework entitled “Payment Services Act.” The law took effect after a year in 2020. Under the framework, cryptocurrency-related firms have to hold a license mandatorily. Ultimately, every crypto firm was being monitored by the Monetary Authority of Singapore (MAS).
The establishment of the regulation helped Singapore to enhance its legal and tax infrastructure. According to experts in the cryptosphere, economies like China, the US, Hong Kong, and few European nations could use the framework of Singapore as a blueprint.
How was the token bond structure made possible?
The framework established for cryptocurrency helped Singapore to enhance its legal and tax infrastructure. Such infrastructure made the country a popular destination for both local and global corporations.
According to Clifford Lee, Global Head of Fixed Income at DBS bank, infrastructure of Singapore has made it possible to create the latest digital bond. Moreover, Asia’s most security tokenization exercises tend to be repackaged forms of common bond issues.
However, the latest bond directly combines existing infrastructure requirements with a direct issuance on crypto assets exchange. Ultimately, the regulation helps facilitate more Security Token Offerings (STO) to broad and deep financial markets.
The digital bond has offered an opportunity to institutions
According to Eng-Kwok Seat Moey, Group Head of Capital Markets at Singapore-based DBS bank, Asia-Pacific accounts for one-third of the global equity hub. Last year, the capital market recorded $4.73 trillion of investments.
It is noteworthy that the latest issued digital bond is offering tremendous opportunity to firms seeking an alternative platform like DDEx of DBS bank. Hence, such institutions can now raise capital from the Asia-Pacific’s flourishing financial market.
