Standard Chartered Bank and OKX Launch the "Collateral Mirror Program" in Dubai, Providing a Pragmatic Solution to the Problem of High Counterparty Risk

In today's rapidly developing cryptocurrency market, I often hear a common problem when serving institutional clients: high counterparty risk and great security risks have deterred many institutions from digital assets.

Today's rapidly developing cryptocurrency market is often limited by high counterparty risk and great security risks, deterring many institutions from digital assets. In 2022, the bankruptcy of the crypto exchange FTX caused billions of dollars in losses, highlighting the severity of the crisis of trust.

To solve this problem, Standard Chartered Bank and OKX launched the “Collateral Mirror Program” in April 2025 in Dubai. It uses the custody services of global systemically important banks (G-SIBs) combined with cryptocurrencies and tokenized funds to create a safe and compliant trading environment for institutional clients.

Its operating mechanism is as follows: institutional clients deposit cryptocurrencies (such as Bitcoin, Ethereum) or tokenized money market funds at Standard Chartered Bank, which acts as an independent trustee, and OKX records these assets through “mirror” technology to facilitate over-the-counter (OTC) transactions.

For example, an institution wants to exchange $50 million worth of Bitcoin for Ethereum. They deposit the Bitcoin at Standard Chartered Bank, OKX handles the exchange, and the Bitcoin is safely returned after completion. The whole process is efficient and secure, without the risk of who pays first.

This program is jointly supervised by the Dubai Virtual Asset Regulatory Authority (VARA) and the Dubai Financial Services Agency (DFSA). VARA licenses and supervises virtual asset service providers (VASPs) such as OKX, while DFSA regulates Standard Chartered Bank's custodial services.

VARA's supervision is based on:

- Virtual Asset Regulation Law No. 4 of 2022: Defines virtual assets and authorizes VARA to regulate VASPs.

- "Regulations on Virtual Assets and Related Activities 2023": Detailed regulations on trading, brokerage, custody and other activities.

- Cabinet Resolution No. 111/2022: Prohibiting unlicensed virtual asset activities and strengthening compliance thresholds.

DFSA's supervision is based on:

- Standard Chartered Bank's banking license in the DIFC.

- Its custody service must comply with DFSA regulations and relevant laws and regulations.

The two regulators coordinate on common goals of anti-money laundering and investor protection to form a "double insurance". For example, the DFSA has an information sharing mechanism with the UAE Financial Intelligence Unit to ensure AML/CFT compliance.

This regulatory synergy allows the program to maintain a high degree of credibility while innovating.

Compared with Hong Kong's TUSD-FDT on the Misappropriation of Reserves: The "Vulnerabilities" and Inspirations of Hong Kong's Crypto Trust Supervision, Dubai's dual regulatory framework targets both virtual assets and traditional financial services, forming a relatively complete regulatory system.

I personally think that this product innovation has indeed solved some obstacles in many business scenarios. Based on my past experience in serving customers, I think the following are several typical scenarios:

1) Cross-border investment: A European pension fund wants to diversify its portfolio by investing in tokenized money market funds from Franklin Templeton in the U.S. To minimize counterparty risk, the pension fund prefers to deposit and withdraw in Euros at Standard Chartered Bank in Paris, and the money market fund trades in U.S. dollars on the blockchain.

2) Interoperability of tokenized assets: A hedge fund in Hong Kong has bought Bitcoin and wants to exchange it for Ethereum to arbitrage price differences. They prefer to transact in Hong Kong dollars with low latency and use a trusted intermediary for counterparty risk.

3) Integration of traditional and digital assets: An asset management company in Singapore manages a multi-asset portfolio with stocks, bonds and tokenized assets. They wish to consolidate reporting and custody with a single bank and have a dedicated contact person for service.

4) Stability and liquidity in volatile markets: During periods of market turmoil, institutions may face difficulties in buying and selling cryptocurrencies at desired prices due to volatility. In April 2025, Standard Chartered Bank and OKX launched the "Collateral Mirror Program" in Dubai to provide a pragmatic solution to this problem.

These scenarios highlight the increasing demand from institutions for safe, compliant and efficient ways to participate in digital assets. The Collateral Mirror Program aims to bridge this gap by combining the strengths of traditional finance and new technologies.

Its potential lies in:

- Attracting more institutions to enter the digital asset market. Many banks and asset management companies are cautious about cryptocurrencies due to security and compliance risks. Standard Chartered Bank's custody services (regulated by the DFSA) and VARA's strict supervision provide institutions with a trusted environment, and Franklin Templeton's tokenized money market fund adds a stable option.

- Expanding market participation. Institutions like Brevan Howard Digital participated in the pilot