Standard Chartered and cryptocurrency exchange OKX have launched a pilot program enabling institutional clients to use cryptocurrencies and tokenized money market funds as collateral for off-exchange trading. The initiative, operating under the regulatory framework of Dubai’s Virtual Asset Regulatory Authority (VARA), is intended to enhance asset protection and capital efficiency for institutional investors.
The program utilizes a collateral mirroring structure, in which Standard Chartered serves as an independent custodian in the Dubai International Financial Centre (DIFC), under oversight from the Dubai Financial Services Authority. OKX’s VARA-regulated entity manages the mirrored collateral and trading operations.
Custody and Risk Management Central to Pilot
By separating collateral storage from exchange activity, the pilot aims to reduce counterparty risk — a persistent concern in digital asset trading. Cryptocurrencies and tokenized versions of money market funds will be held securely by Standard Chartered, one of the globally systemically important banks (G-SIBs) while remaining usable for trading on the OKX platform.
Margaret Harwood-Jones, Global Head of Financing and Securities Services at Standard Chartered, emphasized the need for robust custody frameworks in digital finance, citing the evolving risks and expectations in the institutional crypto market.
Franklin Templeton, a U.S.-based investment management firm known for its digital asset strategies, is the first asset manager to offer tokenized money market funds through the program. Its Digital Assets team will provide on-chain assets accessible to OKX clients, with the goal of integrating blockchain-based financial products into mainstream institutional portfolios.
Early Institutional Adoption Signals Market Demand
Brevan Howard Digital, a division of alternative investment manager Brevan Howard, is among the initial institutions to join the pilot. The firm’s Group Head of Compliance, Ryan Taylor, said the initiative reflects broader momentum toward the institutionalization of crypto infrastructure and risk management standards.
The pilot is part of a growing trend in financial markets where traditional and digital asset firms are converging. By leveraging blockchain technology and regulated custodianship, the project seeks to establish a blueprint for secure and scalable institutional engagement with crypto assets.
Hong Fang, President of OKX, stated that the partnership aligns with the company’s strategy to facilitate capital deployment within regulatory frameworks while ensuring operational transparency.
The timeline for a broader rollout of the collateral program has not yet been announced. Officials said future phases will expand access to more institutional clients and additional tokenized assets, pending regulatory review and performance of the pilot.
