Cryptocurrency exchange OKX has partnered with custody provider Komainu and asset management company CoinShares to facilitate round-the-clock trading of segregated assets to drive institutional adoption of digital assets.
According to OKX, CoinShares will be traded on the OKX exchange, while third-party escrow provider Komainu holds the collateral assets. This is done to mitigate counterparty risk, such as the failure of the other party to fulfill its part of the transaction.
Sebastian Widmann, head of strategy at Komainu, said this is a necessary step to attract institutional adoption of digital assets as it mirrors traditional financial market infrastructure. “By acting as an independent, trustworthy and regulated third-party custodian of mortgage assets, we provide our customers with additional assurance throughout their transaction lifecycle,” Wiedemann said in a statement.
OKX Chief Commercial Officer Lennix Lai believes that the new development solves one of the remaining obstacles for institutional traders, namely counterparty risk. He explained:
“Secure custody solutions are online. The regulatory framework is taking shape. As the trading ecosystem develops, exchange liquidity continues to deepen. However, counterparty risk is a major obstacle faced by institutional traders.”
Lai said this protection increases the trust and confidence of institutional traders and creates a more reliable environment for them to trade digital assets. In a previous interview with Cointelegraph, Lai said it is important to improve compliance standards to bring in more traditional financial investors in the crypto space.
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At the same time, Lewis Fellas, head of hedge fund solutions at CoinShares, said that the cooperation creates a “legally robust mechanism” for the joint management of assets. Ferras said the collaboration also demonstrates the firm’s expertise in “negotiating complex three-party agreements involving collateral, security and legal risks,” which is important to institutional investors.
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