Crypto exchange OKX has partnered with custody provider Komainu and asset manager CoinShares to facilitate round-the-clock trading of segregated assets to push institutional adoption of digital assets forward.
According to OKX, CoinShares will trade on the OKX exchange, while Komainu, a third-party custody provider, holds the collateral assets. This is done to mitigate counterparty risks, such as the other party failing to fulfill its part of the deal in a trading transaction.
According to Sebastian Widmann, head of strategy at Komainu, this is a necessary step to attract institutions to adopt digital assets, as it mirrors traditional 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.
Lennix Lai, the chief commercial officer at OKX, believes that the new development addresses one of the remaining hurdles for institutional traders, counterparty risks. He explained:
“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 protection reinforces the trust and confidence of institutional traders and creates a more reliable landscape for them to transact in digital assets. In a previous interview with Cointelegraph, Lai stated it’s important to raise compliance standards to bring in more traditional finance investors within the crypto space.
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Meanwhile, Lewis Fellas, head of hedge fund solutions at CoinShares, said the partnership creates a “legally robust mechanism” for the mutual management of assets. According to Fellas, the partnership also demonstrates the company’s expertise in “negotiating complex tripartite agreements that cover collateral, security and legal risks,” which are important for institutional investors.
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