SBI Digital Markets eyes crypto growth from Singapore

Kris Hopkins, the former Asia Pacific head of eTrading Sales at Citi and head of client execution for South Asia at Merrill Lynch, became in June the latest senior trader from an investment bank to join a digital asset start-up.

Hopkins is now head of capital markets at SBI Digital Markets, a new digital assets firm based in Singapore and backed by Japanese financial giant SBI.

SBI Digital Markets announced its first wave of hires on Monday when it welcomed Ee Wern Hoe and Jeremy Kwan, who will focus on debt capital markets (DCM), Andrew Pal and Marilyn Tan to develop sales across digital securities and crypto-currencies, and Russell Toop as a product market in the Markets business.

Hopkins has seen first-hand the hysterical claims made by some advocates of crypto-assets and the new generation of related technology, but insists, behind the hype, there is a genuine business opportunity working with banks as they navigate these assets and technologies.

Hopkins said: “Crypto is as divisive as ever, at one extreme we have the evangelists who argue that crypto currencies will replace money as we know it and sound the death knell for banks. And, at the other end of the spectrum, we have the non-believers who refuse to acknowledge that this is something very real and here to stay.

“Meanwhile, many banks continue to spend millions of dollars on patch-ups of their legacy systems. We see our role as bridging this gap by offering institutions regulated solutions and services in the digital asset space.”

Hopkins is quick to stress that SBI Digital Markets is positioning itself at the institutional end of the digital assets market, providing regulated services to regulated firms.

“Regulated banking platforms are going to be essential in generating mainstream adoption of digital assets within financial institutions,” Hopkins said.

The new business will leverage the reputation of SBI Group, a vast Tokyo-based conglomerate regulated by Japan’s Financial Services Agency across its various financial services and asset management businesses.

Hopkins added: “SBI has a strong pedigree as regulated by the Financial Services Agency in Japan and we will be seeking a capital markets license from the MAS in Singapore to offer investment banking solutions, which, over time, will include prime broking, fund creation and structured products.

“That SBI is a trusted brand is a core element of the SBI Digital Markets offering. Building on that trust, we plan to launch a series of security token offerings, which are regulated by the MAS. Our DCM team will look to help clients raise capital through fixed-income products such as bonds, albeit in a blockchain-based security token format. Once licenced, we'll be able to offer a comprehensive framework for companies in their tokenisation journey.”

Hopkins admits there is understandable reluctance on the part of some financial firms to ratchet up their exposure to digital assets but there are also signs of increasing adoption.

“Banks are starting to invest in crypto and blockchain companies and offer clients trading solutions via Crypto access products such as futures, and there are some high-profile examples of that. In a prolonged low interest rates environment firms are making less money and the gains in crypto have naturally attracted attention.”

Hopkins continued: “Historically, the asset managers have been the slowest to move. Sovereign Wealth Funds are investing in crypto businesses while banks are starting to offer crypto futures such as the CME Bitcoin future.”

Alternative investors such as hedge funds are also among the early adopters though this is an unregulated market, so off-limits for most institutional investors.

“Where people are getting creative is in the hedge fund space where we are seeing a number of firms looking to create crypto specific fund entities or explore a fund of funds structure. There are also a number of crypto arbitrage funds popping up.”

Hopkins admits the digital asset markets is not yet fully formed but the credentials of SBI Digital Markets' owner and staff should ensure it will be at the forefront of Singapore’s new breed of financial services firms.