- Komainu will be responsible for holding the collateral assets, according to OKX.
- Widmann stated that this move mimics conventional financial market infrastructure.
Crypto exchange OKX has expanded its relationship with asset management firm CoinShares and custodial joint venture Komainu to provide derivatives trading without the threat of counterparty risk often associated with holding assets on the exchange.
Following the FTX buzz last year, many industry participants have developed secure off-exchange trading and settlement mechanisms.
According to Lewis Fellas, head of hedge fund solutions at CoinShares, off-exchange settlement for spot markets is straightforward. According to him, one of the key differences is that his company offers a comparable framework for trading derivatives.
Addressing Counterparty Concerns
Fellas said, without identifying any specific funds, that in addition to rolling out Komainu custody-based derivatives trading with the main Coinshares organization, a slew of additional hedge funds would be utilizing the new system. In time, he said, the settlement mechanism would be made available on other exchanges as well.
In June of this year, OKX started collaborating with Komainu, a custody expert founded by Japanese bank Nomura, CoinShares, and cryptocurrency storage provider Ledger.
According to Komainu’s director of strategy, Sebastian Widmann, the businesses have done more than only address the trading side of the complexities of derivatives and swaps; they have also developed a standard legal agreement that can be accepted by a wide range of counterparties.
The chief Innovation officer of OKX, Lennix Lai, thinks the new advancement clears out one of the last major obstacles for institutional traders: counterparty concerns.
According to Lai, this assurance encourages institutional traders to have faith in the digital asset market and makes it safer for them to do business. To attract more conventional financial investors in the crypto area, Lai has already argued that stricter compliance rules are necessary.
