OKX, the world’s second-largest cryptocurrency exchange by trading volume, has listed the services of digital asset storage firm Komainu, which allows institutional users to store their crypto in a Nomura-backed custodian while using those funds to trade on the exchange.
It’s a partnership that shows how vertically integrated crypto exchanges can begin to emulate traditional finance and separate operations using third-party custodians to avoid the possibility of another FTX crash.
OKX is the first client to use Komainu Connect, a managed settlement and custody system for institutional clients that offers 24/7 trading using a mix of cold storage, multiparty computation (MPC) and hardware security modules (HSMs).
“Funds deposited in a Komainu custody wallet are transferred to a Komainu collateral wallet and then linked to an OKX account,” OKX Chief Commercial Officer Lenix Lai told CoinDesk via email. “The OKX account then reflects the balance and allows active trading in OKX’s more than 700 spot and derivatives markets.”
The Komainu Connect collateral wallet with visibility to OKX is linked to an institutional-grade three-party account switching agreement, Komainu’s head of strategy Sebastian Widmann explained.
“A tripartite legal agreement exists between Komainu as the custodian, OKX as the liquidity venue and provider, and Komainu’s client as OKX’s client,” Widmann said in an interview. “This allows Komainu’s client to transact directly with Komainu taking care of settlement requirements.”
OKX did not elaborate on how many assets under custody will be transferred to Komainu, but Lai said it is “significant” and expected to grow as the firm expands its institutional product offering.
“Our position is that users have more solutions. We offer on-exchange, off-exchange and third-party balance mirror custody solutions,” said Lai.
Komainu was launched in 2020 as a joint venture between Nomura, digital asset manager CoinShares, and digital asset security company Ledger. It is managed in Jersey and Dubai with offices in London, Dublin and Singapore.