Standard Chartered Bank and OKX have jointly announced the launch of a global collateral mirror project, marking a significant milestone in institutional digital asset services. This innovative initiative allows institutional clients to use both digital currencies and tokenized money market funds as over-the-counter (OTC) collateral, with custody provided by a Global Systemically Important Bank (G-SIB).
Key Features of the Collateral Mirror Project
- Enhanced Security: Custody services by a top-tier G-SIB ensure robust protection of pledged assets.
- Capital Efficiency: Institutions benefit from optimized liquidity management.
- Regulatory Compliance: The pilot operates under Dubai’s Virtual Asset Regulatory Authority (VARA) framework.
Project Implementation
- Custodian: Standard Chartered Bank, regulated by Dubai Financial Services Authority (DFSA), safeguards collateral assets.
- Execution Partner: OKX leverages its VARA-licensed entity for asset management and trade execution.
- Early Adopters: Franklin Templeton and Brevan Howard Digital are among the first institutional participants.
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Addressing Market Challenges
This project directly tackles counterparty risk—a critical pain point in digital asset markets—by:
- Providing transparent asset custody.
- Ensuring real-time collateral verification.
- Offering institutional-grade risk mitigation.
Why This Matters for Institutions
The collaboration combines Standard Chartered’s cross-border banking expertise with OKX’s leading exchange technology to deliver:
- Trusted custodial services.
- Efficient collateral utilization.
- Regulatory-compliant infrastructure.
FAQ: Institutional Collateral Mirror Project
Q1: What types of assets can be used as collateral?
A: The project accepts digital currencies and tokenized money market funds.
Q2: How does this reduce counterparty risk?
A: By employing a G-SIB custodian and real-time asset verification protocols.
Q3: Which regulatory bodies oversee this initiative?
A: VARA governs the pilot, with DFSA regulating custodial activities.
Q4: Can non-institutional investors participate?
A: Currently, this service is exclusively for qualified institutional clients.
Q5: What makes this different from traditional collateral management?