DBS Digital Exchange CEO says investors prefer regulated platforms over yield

Singaporean DBS Bank’s Digital Exchange (DDEx) CEO Lionel Lim said that investors look for regulated platforms instead of searching for the options that provide the best yield, according to Forkast News.

Lim gave an interview to Forkast News reporters where he cited the devastating events of 2022 and how they changed investor behaviors towards seeking safety. Lim stated:

“The blind chase for yield is over. Investors are now seeking safe harbors and prefer trusted, regulated platforms to access the market.”

The DDEx recorded an 80% increase in Bitcoin (BTC) trading volumes and doubled the number of its registered users in 2022. Lim referred to these numbers and said that ” DBS has been a beneficiary of this broader flight of safety.”

According to Lim, DDEx checks the purity of all coins entering its custody and complies with all the anti-money laundering (AML) and know-your-customer (KYC) rules mandatory for banks.

Mentioning the adverse effects of the events of the 2022 bear market, Lim said that he believed 2023 would be the year for the digital asset industry to rebuild trust and confidence. He argued that bank-backed exchanges like DDEx would play a vital role in this process. Therefore, even though DDEx is looking to expand the services it offers its customers, it prioritizes regulatory compliance and safety product variety.

Segregation

Lim also pointed out that the DDEX doesn’t hold any of its customers’ assets under its custody. Instead, all the assets are stored in cold wallets owned by the DBS bank, which adds an extra layer of safety, according to Lim.

Commenting further on the topic of segregation, Lim stated:

“Centralized exchanges will continue to retain their popularity because of their relative ease of use, but we anticipate a shift in how centralized exchanges operate and a move to adopt bank-grade infrastructure and risk management.

One obvious low-hanging fruit is the clear segregation between custody and trading assets.

On Feb. 15, the U.S. Securities and Exchange Commission (SEC) chair Gary Gensler voiced a similar opinion with regard to segregation. Gensler suggested expanding the federal custody requirements to include crypto, which would mandate crypto exchanges to store their customer’s assets separately from the exchanges.