Standard Chartered and cryptocurrency exchange OKX are piloting a new program allowing institutions to use crypto assets and tokenized money market funds (MMFs) as collateral.
Announced on April 10, the collateral mirroring program enables off-exchange collateral usage while enhancing security by placing custody with a globally systemically important bank, according to a joint statement from the companies.
The pilot has been launched under the regulatory oversight of the Dubai Virtual Asset Regulatory Authority, with Standard Chartered acting as a regulated custodian in the Dubai International Financial Centre (DIFC).
The program launched in collaboration with crypto-friendly asset manager Franklin Templeton and features Brevan Howard Digital among the first institutions to trial the new capability.
OKX clients to gain access to assets by Franklin Templeton
As part of the collaboration, OKX clients will have access to onchain assets developed by Franklin Templeton’s digital assets team.
“We take an authentic approach, from directly investing in blockchain assets to developing innovative solutions with our in-house team,” Franklin Templeton’s head of digital assets, Roger Bayston, said, adding:
“By ensuring assets are minted onchain, we enable true ownership, allowing them to move and settle at blockchain speed — eliminating the need for traditional infrastructure.”
According to the announcement, Franklin Templeton will be one of the first in a “series of MMFs” that are expected to be offered under the program by Standard Chartered and OKX.
Standard Chartered backs tokenized funds
In the crypto lending industry, collateral is any blockchain-based asset used to secure loans from a lender as a security measure when taking out a loan. By allowing borrowers to pledge those assets, the lender guarantees that the loan is going to be repaid.
Despite the high volatility of digital assets, Standard Chartered’s Margaret Harwood-Jones, global head of financing and securities services, is bullish on crypto collaterals as a major step in the evolution of institutional crypto services.
A visual of the crypto lending process with collaterals and deposits. Source: CoinRabbit
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“Our collaboration with OKX to enable the use of cryptocurrencies and tokenized MMFs as collateral represents a significant step forward in providing institutional clients with the confidence and efficiency they need,” Harwood-Jones said, adding:
“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.”
According to Ryan Taylor, group head of compliance at Brevan Howard, the program is another example of the ongoing innovation and institutionalization in the crypto 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,” he noted.
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