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This week, Kelvin Lam, CFA, Head of Institutional Research at OKX, explores a critical issue in institutional crypto trading: how a collaboration between OKX, CoinShares, and Komainu advances risk mitigation for institutional players.
How OKX, CoinShares, and Komainu Mitigate Counterparty Risk
The crypto industry has built robust infrastructure to support institutional adoption—secure custody solutions, evolving regulatory frameworks, and deepening exchange liquidity. Yet, institutions remain cautious due to counterparty risk: the possibility that a transaction party may default.
To address this, OKX, CoinShares, and Komainu introduced a tripartite agreement that:
- Secures assets via regulated custody (Komainu).
- Enables efficient trading without relinquishing custody (mirrored balances).
- Clarifies legal rights and recovery processes.
Four Key Challenges and Solutions for Institutional Traders
1. Off-Exchange Custody
Challenge: Third-party custody often limits liquidity, trading instruments, and capital efficiency.
Solution: OKX’s customized framework integrates off-exchange settlements, margin calls, and collateral management, enhancing security and efficiency.
2. Secure Storage
Challenge: Balancing asset security, compliance, and mobility across trading venues.
Solution: Komainu, an FCA-regulated custodian, uses institutional-grade technology to ensure assets are secure, segregated, and blockchain-verifiable.
3. Legal Clarity
Challenge: Unclear ownership rights and recovery processes for assets held on exchanges.
Solution: The tripartite agreement codifies collateralization mirroring (via OKX) and custody (via Komainu), safeguarding assets even in distress scenarios.
4. Operational Integration
Challenge: Fragmented custody, trading, and reporting systems.
Solution: OKX’s API-driven platform combines custodial solutions (collateral mirroring/intra-day settlement) with seamless execution, optimizing capital use.
👉 Discover how OKX’s institutional solutions can enhance your trading strategy
FAQ Section
Q1: How does the tripartite agreement reduce counterparty risk?
A: By separating custody (Komainu) and trading (OKX), assets remain secure even if the exchange faces issues.
Q2: Is Komainu’s custody solution regulated?
A: Yes, Komainu holds registrations with the UK FCA, Italy’s OAM, and Dubai’s VARA.
Q3: Can institutional traders access liquidity without on-exchange custody?
A: Yes, mirrored balances enable trading while assets stay with Komainu.
Q4: How does OKX ensure legal clarity for asset recovery?
A: The agreement defines ownership rights and collateralization processes upfront.
Q5: What makes OKX’s solution unique for institutions?
A: Full integration of custody, trading, and settlement via APIs, available 24/7.
👉 Explore OKX’s institutional offerings today
For details, contact OKX Institutional Sales at [email protected].
Disclaimer: This content is informational only and may not be available in your region. It is not investment, legal, or tax advice. Crypto assets are volatile; assess risks based on your financial condition.
© 2025 OKX. Reproductions must cite: “This article is © 2025 OKX and is used with permission.”
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