OKX, CoinShares, Komainu partner to address crypto’s Achilles heel: counterparty risk
“For institutional investors, counterparty risk is the Achilles heel of crypto when trading on exchange. Without fail it’s the topic most discussed in investor meetings and a major challenge to be overcome as we prepare for true institutional participation in crypto markets.”
OKX has forged a strategic collaboration with Komainu, a regulated digital asset custody service provider, and CoinShares, a leading European alternative asset manager specializing in digital assets.
This partnership enables CoinShares to conduct 24/7 trading on the OKX platform while ensuring assets are held in segregated custody with Komainu.
Addressing counterparty risk
This collaboration marks a pivotal advancement in institutional crypto trading. It addresses a critical concern in the crypto world: counterparty risk. By holding collateral assets in third-party custody with Komainu, the collaboration ensures enhanced security and mitigates risks for institutional traders. This arrangement sets a new standard for the integration of institutional traders with top-tier trading platforms, offering clarity on rights, responsibilities, and redress mechanisms.
Lennix Lai, Global Chief Commercial Officer at OKX, underscored that this arrangement allows traders to access OKX’s market liquidity with the assurance of asset security, provided by Komainu, a regulated custodian. “The next big influx of institutional capital into the crypto markets will come via innovative solutions like this one, which allows traders to access the liquidity of OKX’s leading markets while being assured that their assets are kept with Komainu, a regulated custodian. We’ve listened to our institutional customers and worked with Komainu and CoinShares, who are leaders in their respective sectors, to find a mutually beneficial solution that mitigates counterparty risk while maximizing upside for traders.”
Lewis Fellas, Head of Hedge Fund Solutions at CoinShares, noted that this is a primary topic in investor meetings and a critical challenge for institutional participation in crypto markets. “For institutional investors, counterparty risk is the Achilles heel of crypto when trading on exchange. Without fail it’s the topic most discussed in investor meetings and a major challenge to be overcome as we prepare for true institutional participation in crypto markets. Working with OKX and Komainu for the last six months we’ve devised a robust legal structure, processes and mechanisms to mitigate counterparty risk whilst facilitating high volume trading. The resulting collaboration between ourselves, OKX and Komainu showcases our approach to risk management and amplifies the value we offer to our clients.”
Nicolas Bertrand, CEO at Komainu, expressed satisfaction in contributing Komainu’s expertise to the tripartite agreement, advancing the vision of more trusted crypto markets in collaboration with OKX and CoinShares. “This is a significant step forward in our mission to provide digital asset custody solutions to our customers. We are very pleased to contribute our expertise in institutional-grade custody services to this tripartite agreement, which advances our vision of achieving more trusted crypto markets in collaboration with OKX and CoinShares.”
The groundwork for this tripartite agreement was laid in June 2023, when OKX partnered with Komainu to join the Komainu Connect platform. This earlier partnership set the stage for the current collaboration with CoinShares, demonstrating a strategic progression in OKX’s efforts to integrate advanced custody solutions into its trading platform.