Crypto exchange OKX and multinational bank Standard Chartered have introduced a joint collateral mirroring program, enabling institutional clients to use crypto and tokenized money market funds as off-exchange collateral for trading. This initiative bridges blockchain-based assets with traditional finance, offering institutional investors enhanced flexibility and security.
Program Overview and Regulatory Framework
Currently in its pilot phase, the program operates under Dubai’s Virtual Asset Regulatory Authority (VARA) and employs a Globally Systemically Important Bank (GSIB) as the custodian for collateral.
- Standard Chartered acts as the regulated custodian under the Dubai Financial Services Authority (DFSA).
- OKX, through its VARA-regulated entity, manages collateral and facilitates transactions.
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Key Benefits for Institutional Investors
- Counterparty Risk Mitigation: Clients gain protection against counterparty risks, a critical concern in digital asset markets.
- Capital Efficiency: Optimizes trading capital deployment while safeguarding assets.
- Access to On-Chain Assets: Participants can utilize Franklin Templeton’s tokenized money market funds and other blockchain-native assets.
Industry Endorsements
“By leveraging Standard Chartered’s custodial expertise and OKX’s crypto trading leadership, this partnership sets an industry standard for institutional capital deployment.”
— Hong Fang, President, OKX“Our platform ensures true ownership via blockchain, enabling assets to settle at blockchain speed without traditional infrastructure.”
— Roger Bayston, Head of Digital Assets, Franklin Templeton
Adoption by Major Institutions
Brevan Howard Digital, the digital asset arm of global investment manager Brevan Howard, is among the program’s early adopters:
“This initiative reflects the institutional maturation of crypto. We’re excited to collaborate with industry leaders to advance the ecosystem.”
— Ryan Taylor, Chief Administrative Officer, Brevan Howard Digital
FAQs
1. What is a collateral mirroring program?
It allows institutions to pledge crypto or tokenized assets as collateral for trading, enhancing liquidity without selling holdings.
2. How does this program reduce counterparty risk?
By using a top-tier custodian (Standard Chartered) and regulated frameworks, it ensures asset security and transparency.
3. Which assets are supported?
Tokenized money market funds (e.g., Franklin Templeton’s offerings) and select cryptocurrencies.
4. Is this available to retail investors?
Currently, the program is designed exclusively for institutional clients.
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This collaboration marks a pivotal step in integrating digital assets into traditional finance, combining OKX’s crypto expertise with Standard Chartered’s custodial strength. As the pilot progresses, expect broader adoption and new financial instruments tailored for institutional crypto participation.