Standard Chartered announced this Monday (12) the start of its institutional custody service for the Ripple USD (RLUSD) stablecoin on the XRP Ledger blockchain. The operation is already available to eligible institutional clients, while an integration with LMAX Group, which will allow the tokens to be used as collateral in trading, remains under development.
The custody is offered by the bank's branch in the Dubai International Financial Centre (DIFC), supervised by the Dubai Financial Services Authority (DFSA). As a result, qualified institutions can hold RLUSD on Standard Chartered's digital asset infrastructure, without relying on custody from a trading platform.
The announcement expands the collaboration between the bank, Ripple, the stablecoin's issuer, and LMAX Group, which operates institutional trading platforms for traditional currencies and digital assets. The next stage aims to connect custody services to the management of collateral used in these operations.
RLUSD will be able to collateralize operations at LMAX without leaving bank custody
The planned mechanism uses a model called collateral mirroring, in which the value of assets custodied by Standard Chartered can be recognized by LMAX as collateral, without requiring the direct transfer of the tokens to the platform.
In practice, an institution could keep its RLUSD under bank custody and use its value to back certain trading operations. The structure would separate the safekeeping of the assets from their use as collateral, reducing the need for movements between the bank and the platform.
The companies expect the model to reduce operational risks associated with transfers and improve the management of counterparty exposure. These benefits, however, are still expected results of the integration, not proven effects of a service already implemented.
Standard Chartered emphasizes that the new functionality depends on the conclusion of definitive contracts, successful tests, legal and regulatory requirements, internal approvals and preparation of the jurisdictions involved. No date has been announced for its availability.
The partnership between the bank and LMAX predates the announcement. On September 16, the companies had expanded their collaboration in institutional custody, including operations in Dubai and Luxembourg. At the time, they also reported that they were studying solutions capable of keeping assets off trading platforms while their owners accessed liquidity.
The October statement adds RLUSD to this structure and details how the stablecoin could be used as collateral in selected LMAX products. For now, bank custody is operational, but the integration for using the tokens as collateral has not yet been completed.
