Following the collapse of FTX, institutions (and others) are wary of cryptocurrency exchanges holding their assets. Hence, last year OKX selected Standard Chartered for institutional digital asset custody. Now it has launched a “mirrored collateral” offering, with assets held in custody by Standard Chartered used as collateral for trading on the OKX exchange. Brevan Howard is one of the first institutions to take part.
The collateral is a mix of cryptocurrencies and tokenized assets, starting with Franklin Templeton’s tokenized money market fund.
At this stage, the collateral mirroring is being conducted as a pilot under the supervision of the Dubai Virtual Asset Regulatory Authority’s (VARA).
On the face of it, this is just an off exchange collateral solution. However, it could also be viewed by some institutions as a trial for how tokenized collateral could work elsewhere. For example, in the United States the Commodity Futures Trading Commission (CFTC) is starting to run pilots for using tokenized collateral as margin, with the CME also planning to trial tokenization.
