Cryptocurrency exchange OKX says while there is already strong interest in the cryptocurrency asset class from institutional investors, the development of compliance-ready infrastructure will be a critical factor in driving more institutions to begin investing in the asset class.
Speaking to InvestorDaily, OKX Australia chief executive Kate Cooper said that in the past 12 months, she has seen a shift from speculative interest to structured deployment strategies by institutions.
“In the conversations I’m having with institutions, they’re not asking if they should be engaging [in the asset class], they’re asking how to participate or engage and they’re looking for partners who can deliver compliance-ready infrastructure,” Cooper said.
At a broader level, she noted that inflows into cryptocurrency exchange-traded funds globally had risen significantly and that demand for tokenised assets had also increased.
“Investor sophistication has also increased which all points to an environment where digital assets are being evaluated through the same lens as other asset classes, which is evidence of the maturing of the sector,” she said.
However, Cooper said Australia still remains at the conservative end of the spectrum in terms of investment in cryptocurrency assets compared to what’s happening globally at an institutional level.
“In the United States, we’ve seen some big regulatory shifts in recent weeks and it’s not just pilot adoption that we’re seeing, the big institutions are going all in,” she said.
The United States recently passed its first major piece of cryptocurrency legislation, the GENIUS Act, which establishes a regulatory regime for stablecoins.
It has also been reported that President Donald Trump is planning to sign an executive order that would open up 401k plans to alternative investments such as cryptocurrency assets.
Among APRA-regulated super funds, Cooper said AMP is the only superannuation fund to have invested funds in the asset class so far.
However, she said the significant increase in allocations by self-managed super funds towards cryptocurrency assets suggests that there is broad appetite among Australians for more investment options in this area.
Cooper said that one of the barriers preventing institutions from investing has been the lack of infrastructure to support these investments, which OKX is working to resolve with new solutions.
Back in April, OKX and international banking group Standard Chartered launched a collateral mirroring program, which enables institutional clients to utilise cryptocurrencies and tokenised money market funds as off-exchange collateral for trading.
OKX said the initiative significantly enhances security and capital efficiency for institutional clients by using a globally systemically important bank as the custodian for their collateral.
The collateral mirroring capability was launched as a pilot within the Dubai Virtual Asset Regulatory Authority’s (VARA) regulatory framework and has allowed clients to benefit from enhanced protection against counterparty risk, a significant concern in the current digital asset markets.
Under the program, Standard Chartered acts as the independent, regulated custodian in the Dubai International Financial Centre, regulated by the Dubai Financial Services Authority, ensuring the safe storage of the assets used as collateral, while OKX, through its VARA regulated entity, manages collateral and facilitates transactions.
OKX announced last week that digital asset investment manager JellyC had also joined the collateral program with OKX and Standard Chartered.
JellyC has selected Franklin Templeton’s Tokenised Money Market Fund as trading collateral.
The collaboration allows JellyC to utilise cryptocurrencies and Franklin Templeton’s tokenised money market funds (TMMF) as off-exchange collateral for trading on OKX while using Standard Chartered as the custodian for their collateral.
This initiative enhances security and capital efficiency for JellyC while maintaining the highest standards of security.
JellyC chief executive Michael Prendiville said Franklin Templeton’s natively minted on-chain TMMF provides legal certainty of fund ownership in real time and airdrops daily as new tokens.
“Marrying the Franklin TMMF with the Standard Chartered-OKX tripartite collateral structure elevates safety and soundness to a level akin to traditional finance, making this fit for purpose in a digital world,” Prendiville said.
“We have a solution suitable for the wealth and funds management sector as well as the superannuation industry in Australia. We are witnessing an increasing institutional demand for digital asset trading solutions that leverage established banking infrastructure, ensuring secure and compliant capital deployment in crypto markets.”
Cooper said that historically, institutional traders seeking exposure to cryptocurrency markets have faced a challenging trade-off between market access and asset security.
“Through collaboration with world-class partners, we’ve built the infrastructure that institutions have been waiting for – combining deep liquidity with institutional-grade custody and compliance,” Cooper said.
“JellyC joining the tripartite program validates our approach to solving the key barriers to institutional crypto adoption. This is just the beginning of what we expect to be significant institutional momentum in the Australian market.”
