Banking giant Standard Chartered and global crypto exchange OKX have rolled out a pilot collateral mirroring programme in Dubai.
The move aims to enable institutional clients to use cryptocurrencies and tokenised money market funds as off-exchange collateral for trading without the need to transfer these assets to the trading platform.
Instead, the assets are held securely by a regulated custodian, while the trading platform mirrors the collateral, enabling transactions, and aiming to boost security and regulatory compliance.
Founded in 2017, OKX is Seychelles-based cryptocurrency exchange which enables investors to buy Bitcoin, Ethereum and other cryptocurrencies.
It currently operates in several markets around the world, including Hong Kong, the United Arab Emirates, the Bahamas, and France.
Standard Chartered said that the collateral mirroring capability aims to boost protection against counterparty risk, a significant concern in the current digital asset market.
Standard Chartered acts as the independent, regulated custodian in the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority, ensuring the safe storage of the assets used as collateral, while OKX through its VARA regulated entity manages collateral and facilitates transactions.
Margaret Harwood-Jones, global head of securities and financial services at Standard Chartered, emphasised the critical importance of robust and secure custody solutions, especially in the evolving landscape of digital assets.
She said that the collaboration with OKX allows the use of cryptocurrencies and tokenised money market funds as collateral, representing a significant step forward in providing institutional clients with the trust 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,” she added.
US-based investment firm Franklin Templeton will be the first in a series of money market funds that will be offered under the new programme.
Roger Bayston, head of digital assets at Franklin Templeton, said the platform was created to support the dynamic and ever-evolving financial ecosystem.
“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,” he continued.
The programme has garnered support from several well-known institutions, including hedge fund focused investment firm Brevan Howard, which has joined the programme.
Ryan Taylor, group head of compliance at Brevan Howard Brevan commented: “This programme is the latest example of the continued innovation and institutionalisation 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.”
