DBS, UOB, OCBC eye risks while banking on tokenised assets for the future
Hurdles such as talent shortage and regulations stand in the way of local banks
[SINGAPORE] Singapore banks are accelerating their push into asset tokenisation, but they are wary of regulatory and talent hurdles.
Take DBS, for example. The local banking giant launched tokenised structured notes on the Ethereum public blockchain in August. Structured notes are financial instruments whose value is linked to that of an underlying asset or index.
When an asset is “tokenised”, it means that it is converted to a digital asset that can be traded on the blockchain. Tokenised assets, a relatively new financial development, are expected to speed up transactions and enhance the liquidity of assets.
They fall under the digital assets umbrella, which includes cryptocurrencies and central bank digital currencies.
Even though DBS’ tokenised structured notes were only recently launched, this is not its first venture within the digital assets space.
Speaking in a panel discussion during the Digital Assets Summit held at Chijmes on Sep 30, Kelvin Tan, head of tokenisation for global financial markets at DBS, shared that the bank experimented with tokenising bonds on its private blockchain back in 2021.
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“Unfortunately, we realised that on the private blockchain, there wasn’t a lot of interest,” he said.
In recent years, other banks have been looking at Singapore’s digital asset space with keen interest, noting the huge value that it can bring into the financial sector.
“Tokenisation is no longer a niche area of finance. It is actually becoming the mainstream of financial services at this point in time,” said Dr Steven Hu, head of digital assets for global markets at OCBC.
Stablecoins are the “poster child” for digital assets in 2025, acknowledged Yip Kah Kit, head of blockchain and digital assets at UOB Group.
But the future of digital assets in banking lies in tokenised bank deposits and central bank digital currencies, he said.
“I think there are also other classes of tokenised money – bank deposits being one – that are closely related to both the internal operations and also integrate very well with the core systems of banks in general,” he added.
Many hurdles to overcome
But amid the hype, banks are aware of the multiple hurdles they have to leap across before turning theory into reality.
One key challenge identified was anti-money laundering compliance. Digital assets, such as cryptocurrencies, have been under scrutiny as a vehicle for money laundering.
In Singapore, 49 people were probed for suspected money laundering involving cryptocurrency accounts in June this year.
“Just because we tokenise the security doesn’t mean that we can sell it to anyone,” Tan from DBS said.
To solve this, Patrick Yeo, head of digital assets for global financial markets at DBS, said the financial industry needs to move towards a “common framework for KYC (knowing your customers)”.
The goal is to allow a DBS smart contract to interact with a wallet from another major bank, such as JPMorgan, by bridging their respective KYC frameworks.
This would “massively scale up how decentralised finance actually works” with necessary guardrails, Yeo said.
But for the frameworks to be developed and implemented, more talent is needed in the digital assets space.
OCBC’s Hu noted that from a financial institution perspective, an ideal talent would need to be both an investor and a “techie”.
“I call it a ‘Superman’ kind of talent,” he said.
On top of that, Hu noted that OCBC is also looking for talents who have expertise in the legal aspect of compliance governance, as well as risk management.
“I think the kind of collaboration with universities and the industry has to change,” he said.
He acknowledged that artificial intelligence (AI) will change the format of learning, and the industry and universities will need to leverage the latest technology.
Regulators watching the space
Alan Lim, head of fintech infrastructure and the AI office at the Monetary Authority of Singapore, said tokenisation technology has been gaining a lot of interest.
He emphasised the importance of collaboration between regulators and the industry, as seen in Project Guardian.
Project Guardian is a collaboration between policymakers and the financial industry to “enhance liquidity and efficiency of financial markets through asset tokenisation”.
“I think bringing these different elements together... gives us a framework, a taxonomy for how assets could be tokenised, and how these different assets could then interact with each other,” he said.
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