DBS Bank in Singapore Launches Tokenized Structured Notes on the Ethereum Blockchain

DBS Bank announced Thursday its plan to tokenize structured notes on Ethereum.

The bank will collaborate with ADDX, DigiFT, and HydraX for product distribution.

Structured notes combine debt securities and derivatives to give investors exposure to various assets like stocks and commodities, with regular returns linked to an underlying asset.

In this new product, the underlying assets will be cryptocurrencies.

According to the bank, “The note structure allows investors to receive cash when cryptocurrency prices increase, giving them exposure without needing to manage any cryptocurrency.” They also aim to reduce potential losses if cryptocurrency values fall.

DBS emphasized that tokenizing these assets will enhance their tradeability and fungibility.

“Asset tokenization represents a new frontier in financial markets infrastructure,” stated Li Zhen, DBS’s Head of Foreign Exchange and Digital Assets, Global Financial Markets.

He added, “Our first tokenized product addresses the increasing institutional interest in digital assets.”

DBS has not yet provided a response to Decrypt‘s inquiry for comments.

This is not the first instance of such a product; BlackRock, the largest fund manager globally, launched its initial tokenized fund last year, operating on Ethereum. CEO Larry Fink has frequently discussed the potential of asset tokenization.

Other financial services leaders, such as Bank of America and Citi, are also probing tokenization. The World Economic Forum noted in a report from May that tokenization could “unlock the next generation of value exchange in financial markets.”

“While challenges persist, there is growing momentum, and stakeholders must collaborate on regulation, interoperability, and consumer safety to facilitate this evolution,” the authors of “Asset Tokenization in Financial Markets: The Next Generation of Value Exchange” remarked.