Out-Law / Your Daily Need-To-Know

DBS issues first tokenised bond on digital exchange

Out-Law News | 09 Jun 2021 | 2:37 am | 1 min. read

The DBS bank has issued a S$15 million ($11.3m) digital bond in its first security token offering (STO).

In an STO tokenised digital securities, known as security tokens, are sold in security token exchanges. Security tokens are digital contracts which are part of assets such as bonds, stocks or real estate. This type of transaction is enabled via blockchain technology.

DBS’ digital bond offering was done by private placement on the DBS digital exchange.

DBS' current transaction combines existing legal and tax infrastructure requirements with a direct issuance on the digital exchange in smaller lot sizes, according to a report.

Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The issuance by DBS of its first security token offering by way of a digital bond is yet another milestone as it arguably represents a step forward for security token offerings, and for asset tokenisation in general. Going forward, it may be that the market will see more STO issuances, as both issuers and investors get more comfortable with this alternative method of capital fundraising. This is also likely to be seen as a boost for Singapore’s ongoing ambitions to become a digital asset hub in the region.”

The bank launched digital exchange in December 2020 to provide integrated tokenisation, trading and custody services for institutional investors and accredited investors. It currently has 120 participants, comprising institutional and accredited investors.

In May, DBS Private Bank launched a bank-backed trust solution for cryptocurrencies which builds on the digital exchange.