Over the past few years, United Overseas Bank (UOB) has become one of the most active crypto investors among top banks, currently investing in 31 crypto companies, covering various verticals including infrastructure, CeFi, DeFi, NFT, blockchain gaming, and social media.

By Zen, PANews

The banking industry has been closely monitoring cryptocurrencies in recent years, seeking to improve efficiency, reduce costs, meet digital demands, and explore new business opportunities. According to Blockdata, a blockchain analytics company, as of June last year, 61 of the top 100 banks in terms of managed assets had invested in the crypto asset space.

Among them, United Overseas Bank (UOB), headquartered in Singapore, has become one of the most active crypto investors among top banks in recent years, currently investing in 31 crypto companies, covering various verticals including infrastructure, CeFi, DeFi, NFT, blockchain gaming, and social media.

Top Three Banks in Singapore, Focused on Southeast Asia

United Overseas Bank is one of the top three banks in Singapore, established in 1935. Its global network consists of 500 branches and offices across the Asia-Pacific region, Europe, and 19 countries in North America. In Asia, UOB conducts extensive financial operations through its headquarters in Singapore, subsidiary banks in China, Indonesia, Malaysia, Thailand, and Vietnam, as well as branches and offices in various locations. According to the bank's 2022 annual report, its core net profit reached 4.8 billion Singapore dollars (approximately 24.9 billion RMB), an 18% year-on-year increase, reaching a historical high. With its extensive operational network and robust balance sheet, UOB is one of the few banks rated "Aa1" by Moody's, "AA-" by S&P Global Ratings, and "AA-" by Fitch Ratings.

UOB has a significant presence in the Southeast Asian region, with branches spread across Southeast Asian countries, making it the third-largest bank in terms of total asset value in Southeast Asia. On November 20, 2023, according to Citigroup's official website, the sale of Citigroup's personal consumer banking business in Indonesia to UOB has been completed, including retail banking, credit card and unsecured loan businesses, as well as employee transfers. With this, UOB has completed the acquisition of Citigroup's retail business in the ASEAN's four major markets (Malaysia, Thailand, Vietnam, and Indonesia).

UOB's investment business is mainly managed by its wholly-owned subsidiary, UOB Venture Management (UOBVM), which has been providing funding support to numerous private enterprises through direct equity investments in Southeast Asia and Greater China since 1992.

UOBVM's core team members have collaborated for over 15 years, with diverse experience and expertise in various fields including business, engineering, life sciences, accounting, mergers and acquisitions, corporate consulting, and auditing. This diverse experience and expertise, combined with local talent from Singapore, Indonesia, Vietnam, and China, have enabled UOBVM to establish a strong network in the region, with a sustainable project pipeline evaluating over 700 companies annually in the ASEAN and China region. During due diligence, UOBVM typically assesses companies and projects for risks in six areas: management risk, market risk, financial risk, entry barrier risk, execution risk, and compliance risk. Companies with two or more high-risk factors are not considered for investment.

Unlocking Asset Value through Blockchain Technology and Tokenization

Due to the significant risks, uncertain valuations, and high volatility associated with cryptocurrencies and related assets, UOB will not engage in the cryptocurrency space or offer cryptocurrency services to clients until relevant investment protection regulations are in place. However, UOB believes that innovations around these underlying blockchain technologies can improve the operation of capital markets, enhance efficiency for lenders, simplify operations, improve transaction efficiency, and enable banks to offer innovative products. UOB recognizes the potential of blockchain technology and has been actively promoting the application of blockchain technology and asset tokenization in recent years.

In 2021, UOB collaborated with the Infocomm Media Development Authority (IMDA) of Singapore to pilot a new China-Singapore cross-border digital trade finance transaction using blockchain technology provided by TradeTrust. The pilot results showed reduced processing time (from several days to less than an hour) and demonstrated the interoperability of TradeTrust in paperless workflows within the trade ecosystem. By adopting this blockchain-based trade document exchange, UOB can more easily complement digital trade ecosystems with tokenized trade finance assets.

In June of the same year, UOB piloted the issuance of digital bonds on Marketnode's digital asset issuance and custody platform, making it the first financial institution in Singapore to tokenize capital securities. Marketnode is a joint venture between the Singapore Exchange and Temasek, utilizing blockchain, smart contracts, and tokenization to digitize capital markets.

Leong Yung Chee, Executive Director of Blockchain and Digital Assets at UOB, believes that digital assets will become an important asset class and will eventually be widely applied across the banking industry. He categorizes digital assets into four main types: central bank digital currencies (CBDCs), tokenized securities, stablecoins, and cryptocurrencies. Currently, UOB is focused on developing use cases around CBDCs and tokenized securities, while closely monitoring stablecoins.

Leong stated, "Given their unique ability to maintain stable value and redeem at face value, stablecoins have the potential to provide reliability of value and serve as a potential bridge between fiat and cryptocurrencies." However, he pointed out that there have been fraud incidents in algorithmic stablecoins, and regulations governing the use and trading of collateral-backed stablecoins have not been established.

UOB believes that enhanced regulation is key for the financial industry to adopt blockchain technology. Regulators must act prudently to promote innovation while ensuring accountability, transparency, and financial stability in the operation of blockchain companies. In addition, achieving tokenized value requires more than just a regulatory framework. The ecosystem must establish institutional-grade networks, assess the applicability of tokenization for various use cases, establish participant eligibility criteria, identify infrastructure vulnerabilities, and ensure the secure storage and custody of tokens, making industry-wide collaboration the key to unlocking asset value through tokenization.

UOB's Crypto Investment Portfolio

According to crypto data provider RootData, UOBVM has currently invested in 31 crypto projects and companies.

PANews has previously reported on some of the financing information. Based on available information, brief introductions to some projects are as follows:

• Manta Exchange: A cryptocurrency exchange that announced the completion of a new round of financing in November 2023, with participation from ABCDE Labs, among others. The amount of financing has not been disclosed.
• Glacier Network: A decentralized data composability protocol aimed at creating a composable, modular, and scalable Layer2 data-driven network for large-scale decentralized applications, and promoting DApp creation based on decentralized databases (DDB) for trustless data primitive use cases. In November 2023, it announced the completion of a $2.9 million seed round of financing, with participation from Gate Labs, among others.
• Supra: A provider of oracle and VRF services, currently developing an innovative cross-chain oracle and "bridgeless" communication network aiming to achieve sub-2 second finality, with security guarantees expected to be more than 10 times higher than existing bridges using its custom consensus algorithm "Moonshot Consensus." In September 2023, it announced the completion of a $24 million financing round, with participation from Animoca Brands, Coinbase Ventures, among others.
• Transak: A fiat aggregator that allows users to switch funds between traditional finance and crypto assets, currently available in over 150 countries/regions. In May 2023, it announced the completion of a $20 million Series A financing round, led by CE Innovation Capital.
• Vinci Protocol: An NFT infrastructure protocol developing NFT data services and development toolkits, including NFTFi, NFT oracles, NFT governance, and more. In November 2022, it announced the completion of a $2.1 million seed round of financing, with UOBVM, Signum Capital, and TGE Capital leading the investment.
• Arf: A stablecoin cross-border payment network that announced the completion of a $13 million financing round in October 2022, with participation from Circle Ventures, among others.
• XLD Finance: A DeFi service company, with its main service xSpend acting as the "crypto-to-fiat off-ramp," allowing users to pay utility bills with cryptocurrency. In July 2022, it announced the completion of a $13 million Series A financing round, led by Dragonfly Capital and Infinity Ventures Crypto.
• TeaDAO: A metaverse algorithmic stablecoin project aimed at building an ecosystem combining DeFi 2.0, GameFi, and the metaverse. In March 2022, it announced the completion of a $4.6 million seed round of financing, with investment from Shima Capital, among others.

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