Standard Chartered and OKX announced the launch of “collateral mirroring”, a program for institutional clients to use cryptocurrencies and tokenized money market funds as off-exchange collateral for trading that uses a Globally Systemically Important Bank (G-SIB) as the custodian for their collateral.
The capability has been launched as a pilot within the Dubai Virtual Asset Regulatory Authority’s (VARA) regulatory framework, and it allows clients to benefit from enhanced protection against counterparty risk, a significant concern in the current digital asset markets.
Margaret Harwood-Jones, global head of Financing and Securities Services at Standard Chartered, said in a statement: “We understand the critical importance of robust and secure custody solutions, especially in the evolving digital asset landscape, and our collaboration with OKX to enable the use of cryptocurrencies and tokenized money market funds as collateral represents a significant step forward in providing institutional clients with the confidence and efficiency they need. By leveraging our established custody infrastructure, we are ensuring the highest standards of security and regulatory compliance, fostering greater trust in the digital asset ecosystem.”
Standard Chartered acts as the independent custodian in the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority, for safe storage of assets used as collateral, while OKX, through its VARA regulated entity, manages collateral and facilitates transactions. Franklin Templeton will be the first in a series of money market funds that will be offered under the OKX-SCB program.
Hong Fang, President of OKX, said in a statement: “As the digital assets ecosystem becomes more ingrained within traditional finance, we strive to both drive growth and safeguard client assets in the most capital efficient manner. By leveraging Standard Chartered’s position as a top custodian globally, as well as OKX’s market leadership in cryptocurrency trading, the partnership sets an industry standard for current and potential institutional clients to deploy trading capital at scale in a trusted environment.”
OKX clients will gain access to on-chain assets developed by Franklin Templeton’s Digital Assets Team, integrating them into their financial and operational structures.
Roger Bayston, Franklin Templeton’s head of Digital Assets, said in a statement: “Leveraging blockchain technology, our platform is built to support the dynamic and ever-evolving financial ecosystem. We take an authentic approach, from directly investing in blockchain assets to developing innovative solutions with our in-house team. By ensuring assets are minted on-chain, we enable true ownership, allowing them to move and settle at blockchain speed – eliminating the need for traditional infrastructure.”
Brevan Howard Digital, the alternative investment manager’s crypto and digital asset division, is among the first few institutions to onboard.
Ryan Taylor, group head of Compliance at Brevan Howard and chief administrative officer of Brevan Howard Digital, said in a statement: “This program is the latest example of the continued innovation and institutionalization of the industry. As a significant investor in the digital assets space, we are thrilled to partner with industry leaders to further grow and evolve the crypto ecosystem globally.”