OKX, the world’s second-largest cryptocurrency exchange by trading volume, has partnered with digital asset storage firm Komainu to offer institutional users the ability to keep their crypto within the Nomura-backed custodian while using those funds to trade on the exchange. This partnership is a step towards vertically integrated crypto exchanges emulating traditional finance, by segregating operations using third-party custodians, in a bid to avoid the possibility of another FTX collapse.
OKX is the first client to use Komainu Connect, a regulated settlement and custody system for institutional customers that offers 24/7 trading with a mix of cold storage, multiparty computation (MPC) and hardware security modules (HSMs). “Funds deposited in a Komainu custody wallet are moved to a Komainu collateral wallet and then linked to an OKX account,” OKX Chief Commercial Officer Lennix Lai said. “The OKX account then mirrors the balance and allows active trading across OKX’s 700-plus spot and derivatives markets.”
The Komainu Connect collateral wallet, which OKX has visibility into, is linked to an institutional-grade tri-party account change agreement, Komainu’s head of strategy, Sebastian Widmann, explained. “There exists a tri-party legal agreement between Komainu as the custodian and OKX as the liquidity venue and provider, and Komainu’s client, as the client of OKX,” Widmann said. “This allows Komainu’s client to trade directly on exchange with Komainu taking care of the settlement requirements.”
OKX declined to provide specifics on the amount of assets under custody that would be transferred to Komainu, but Lai said it was “significant” and it’s expected to grow as the firms enhance their institutional product offering. “Our standpoint is the more solutions users have, the better. We are offering on-exchange, off-exchange, and third-party balance mirror custody solutions,” Lai said.
Komainu was launched in 2020 as a joint venture between Nomura, digital asset manager CoinShares, and digital asset security company Ledger. It’s regulated in Jersey and Dubai with offices in London, Dublin, and Singapore.