Standard Chartered & OKX partner on collateral mirroring program in Dubai
British multinational banking conglomerate Standard Chartered has partnered with global crypto exchange OKX in Dubai on a collateral mirroring pilot program.
Off-chain collateral
In a press release published on April 10, the companies set out details of the collaboration. The initiative will facilitate institutional clients to utilize digital assets and tokenized money market funds for trading as off-chain collateral.
Trading activity requires the ongoing movement of funds and assets between custodians and exchange platforms. The activity is expensive and slow. Back in 2023, OKX had collaborated with crypto custodian Komainu and asset manager CoinShares to enable collateral mirroring to overcome this operational inefficiency. In that instance, CoinShares was enabled to trade on OKX using a collateral mirroring facility provided by OKX with Komainu acting as asset custodian.
This latest initiative has also seen OKX work with alternative investment management firm Brevan Howard, global investment management company Franklin Templeton and local regulator in Dubai, the Virtual Assets Regulatory Authority (VARA).
Developed within regulatory framework
The collateral mirroring facility has been established on a pilot program basis to start with, having been developed within the regulatory framework established in Dubai by VARA. Standard Chartered will act as the digital asset custodian as part of the arrangement.
The press release points out that Standard Chartered is a Globally Systemically Important Bank (G-SIB), asserting that this will afford clients a higher level of security. By not having to manually move the digital assets, there is an additional security-related process improvement, given the ongoing risks associated with digital assets held on exchanges due to incidents of hacking.
Hong Fang, OKX president, provided some insight into why the company has partnered with Standard Chartered, stating:
”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 CEO Star Xu outlined on X that the service offering is geared towards tokenized money market funds with the aim of improving capital efficiency and counterparty risk protection.
Standard Chartered launched its crypto custody services in Dubai last September. The service was established in partnership with Brevan Howard Digital, having been licensed by the Dubai Financial Services Authority (DFSA), the independent regulator for financial service providers located within the Dubai International Financial Centre (DIFC), an economic free zone.
In October 2024, OKX selected Standard Chartered as its digital asset custodian for the crypto exchange platform’s institutional clients.
First clients
Brevan Howard Digital and Franklin Templeton will participate as the first clients to trial the new service offering. Furthermore, as part of the collaboration, OKX platform users will gain access to tokenized on-chain assets developed and offered by Franklin Templeton. Franklin Templeton’s head of digital assets, Roger Bayston, commented on the firm’s on-chain product offering, stating:
“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.”
