Standard Chartered (StanChart) and OKX have partnered to introduce an innovative off-exchange collateral solution, enabling institutional clients to trade on OKX while their assets remain securely held in custody by StanChart. This "mirrored collateral" offering combines cryptocurrencies with tokenized assets, starting with Franklin Templeton’s tokenized money market fund (MMF). Brevan Howard is among the first institutions to participate in the pilot, supervised by Dubai’s Virtual Asset Regulatory Authority (VARA).
How Mirrored Collateral Works
- Asset Custody: Assets (crypto + tokenized MMFs) are held by StanChart, acting as collateral for OKX trading.
- Reduced Counterparty Risk: Addresses post-FTX concerns about exchange-held assets.
- Pilot Phase: Currently trialed under VARA oversight, with potential expansion.
Key Features
- Tokenized MMFs: Franklin Templeton’s fund marks a milestone in real-world asset (RWA) tokenization.
- Institutional Adoption: Brevan Howard’s involvement signals confidence in the model.
- Regulatory Collaboration: VARA’s supervision ensures compliance in Dubai’s progressive crypto framework.
Broader Implications for Tokenized Collateral
This initiative isn’t just about off-exchange security—it’s a testbed for tokenized collateral’s future applications:
- CFTC Pilots: The U.S. Commodity Futures Trading Commission is exploring tokenized collateral for margin requirements.
- CME Trials: Plans to test tokenization on Google’s Universal Ledger highlight growing institutional interest.
👉 Explore how tokenization is reshaping finance
FAQs
Why is mirrored collateral significant?
It mitigates risks like exchange insolvencies (e.g., FTX) while enabling liquidity via tokenized assets.
Which tokenized assets are supported?
Initially, Franklin Templeton’s MMF; more RWAs (e.g., bonds, equities) may follow.
How does VARA’s role impact the pilot?
Dubai’s regulator ensures the pilot adheres to local virtual asset laws, setting a precedent for other jurisdictions.
Could this model replace traditional collateral?
If successful, mirrored collateral could expand to derivatives, loans, and cross-border settlements.
The Road Ahead
As institutions seek safer crypto exposure, solutions like OKX-StanChart’s mirrored collateral blend custody security with trading flexibility. Its success could accelerate RWA tokenization and inspire similar frameworks globally.