Cryptocurrency exchange OKX and Standard Chartered pilot program allowing institutions to use crypto assets as collateral

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.

Standard Chartered and cryptocurrency change OKX are piloting a program that permits establishments to use crypto assets and tokenized money market funds (MMFs) as collateral.

The collateral mirroring program allows off-exchange collateral usage while enhancing security by placing custody with a globally systemically important bank, according to a joint statement by the companies on April 10.

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:

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

Related: Xapo Bank launches Bitcoin-backed USD loans targeting hodlers

“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:

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.