Cryptocurrency exchange OKX has collaborated with custody provider Komainu and asset management CoinShares to enable round-the-clock trading of segregated assets in order to accelerate institutional adoption of digital assets.
CoinShares will be traded on the OKX exchange, with collateral assets held by Komainu, a third-party custody service, according to OKX. This is done to reduce counterparty risks, such as the other party in a trading transaction failing to perform its share of the arrangement.
According to Sebastian Widmann, Komainu’s head of strategy, this is a critical step in attracting institutions to adopt digital assets because it matches existing financial market infrastructure. “By acting as independent, trusted and regulated third-party custodians for collateral assets, we give our clients additional assurances throughout their trading lifecycle,” Widmann said in a statement.
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OKX’s chief commercial officer, Lennix Lai, feels that the new breakthrough eliminates one of the last remaining barriers for institutional traders: counterparty concerns. He elaborated:
“Secure custody solutions are live. Regulatory frameworks are taking shape. Exchange liquidity is deepening alongside the development of the trading ecosystem. However, counterparty risk is a big remaining hurdle for institutional traders.”
According to Lai, this safeguard strengthens institutional traders’ trust and offers a more dependable environment for them to transact in digital assets. In a previous interview with Cointelegraph, Lai noted that it is critical to strengthen compliance standards in order to attract more traditional finance investors into the cryptocurrency market.
Meanwhile, Lewis Fellas, CoinShares’ head of hedge fund solutions, stated that the collaboration creates a “legally robust mechanism” for asset management. The relationship also displays the company’s ability in “negotiating complex tripartite agreements that cover collateral, security and legal risks,” which is vital for institutional investors, according to Fellas.
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