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Asian family biz wins digital bank license in Labuan

Portcullis, a family office run by David Chong, is set to disrupt private banking with digital-bank Baxian.

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David Chong, Baxian Bank

Baxian Private and Investment Bank has won a full digital bank license from Labuan, Malaysia’s offshore financial center.

Baxian Trust is run by David Chong, the founder and president of Portcullis Group, a trust, fund manager and multi-family office representing about 15,000 wealthy people from the region.

Chong spoke with DigFin using terms such as “dumb utility” to describe his new bank. DigFin believes what he is proposing is a digital bank that can functionally do everything that a big private bank can do, but with Portcullis’s high-touch services on top – in effect, he is launching a fully digital rival to the West’s biggest private banks.

Chong says that Portcullis and Baxian Trust work with many global private banks, but that their business models remain problematic. The prospect of launching a digital bank that can accept deposits without the costs of a physical branch made it possible for Portcullis to develop a different proposition for its clients.

Dumb, clean, and digital

“Banks should be dumb utilities that enable clients to do other things,” Chong said. “But too many stray into trouble. Private banks help us but they have legacy businesses in Europe and the U.S., and they haven’t cleared up their problems.”

He didn’t detail specifics but he was speaking generally about large financial institutions either dealing in illicit or unethical activity, or taking on too much risk.



This year’s Archegos debacle in the U.S., and Goldman Sachs’s pleading guilty to violating Malaysia’s bribery laws in the 1MDB scandal, come to DigFin’s mind.

“I want a squeaky-clean bank,” Chong said, adding that the former commissioner of the Singapore police, Tee Tua-Ba, is serving as chairman of Portcullis.

What are the things a deposit-taking “dumb utility” can do for Portcullis’s wealthy clients? Chong mentions three things.

From KYC to RMB

One is to make client onboarding easier. Chong, a lawyer, says banks’ legacy systems for checking for money laundering or terrorist financing before accepting a customer are painful. A new bank built on a fresh stack can make this process easier.

Second, the older generations of wealthy people may struggle with digital technology, and Baxian is being designed to help ease them into using these channels.

Third is facilitate other, more interesting transactions, including corporate advisory, asset and wealth management, sales and trading, and working capital solutions; the bank will also offer sharia-compliant banking services.

I want a squeaky-clean bank

David Chong, Baxian

Chong says one new use case will be payments, specifically the ability to transact in e-renminbi, once China fully deploys its digital fiat currency. Baxian is being set up as a correspondent clearing bank for both dollars and RMB.

That ambition ties Baxian to another licensed arm of the Portcullis group: Fusang Digital Exchange, also licensed in Labuan, and run by David Chong’s son Henry. Baxian intends to list its shares as digital assets on Fusang by the end of 2021.

Baxian fills in a different gap in Asia’s exploding virtual-banking scene. Most such institutions, as licensed by Singapore, Hong Kong, or elsewhere in Southeast Asia, are generally intended to address financial inclusion. But Baxian will cater to the rich. A Baxian press release also dwells on the opportunities for digital Islamic banking, noting mutual recognition agreements between Labuan and Qatar.

Labuan is emerging as a location for other regional blockchain-based financial initiatives. Baxian joins two other digital banks licensed there, one a branch of China Construction Bank – which was at one point about to launch a digital bond on Fusang’s exchange – and the other called Hamilton Bank, a joint venture involving Ho Wah Genting Group that is domiciled in Nevis & St. Kitts, which in 2019 launched a blockchain platform with a digital-asset wallet and a stablecoin pegged to the U.S. dollar. 

David Chong’s roots in Labuan are deep. Although based in Singapore, his family is Malaysian. As a lawyer early in his career, he helped draft the original Labuan Financial Services and Securities Act, in 1990. (It has been updated since.)

He remains managing director of David Chong Law Corporation as well as president of Portcullis, which launched 35 years ago in the mold of Bessemer Trust, a venerable family office in the U.S.

Baxian has received a conditional license that will ultimately require RM200 million ($50 million) in paid-up capital. “This is the capstone of my career,” Chong said.


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Asian family biz wins digital bank license in Labuan