Key Takeaways:
- RLUSD’s listing on the XRP Ledger is now covered under Standard Chartered’s institutional custody program.
- The bank is negotiating with Ripple and LMAX group to qualify RLUSD as collateral for the bank.
- The planned setup potentially will allow institutions to trade via RLUSD without transferring tokens to the venue.
Standard Chartered has taken another step into stablecoin infrastructure by launching custody support for Ripple USD, or RLUSD, on the XRP Ledger.
Now it is offered to eligible institutional traders from the bank’s Dubai International Financial Centre branch, and a wider collateral integration with Ripple and LMAX Group is underway.
Standard Chartered Launches RLUSD Custody on XRPL
Standard Chartered’s digital asset custody infrastructure has now made eligible clients able to hold RLUSD. The service is offered through the bank’s DIFC branch, which is regulated by the Dubai Financial Services Authority.
That provides another way for institutions to gain access to RLUSD, aside from crypto-native custodians. The move is targeted at those looking to gain access to digital asset markets without compromising on the importance of maintaining institutional level practices for long-term custody, governance and risk management, Standard Chartered Inc said.
RLUSD runs on the XRP Ledger, the platform that aims to deliver quick and cheap settlement for DeFi applications.
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RLUSD Could Stay in Custody While Supporting Trading
The more noteworthy facet of the partnership is the envisioned cross collateral model. Standard Chartered and the LMAX Group plan to enable RLUSD to qualify for specific products and trading services.
According to this design, the client will not be required to transmit their RLUSD to the trading platform. LMAX, on the other hand, would be reimbursed by the bank Standard Chartered for the value of the eligible collateral, with the underlying tokens still held by the bank.
The model should help to mitigate operational risks associated with frequent transfers of assets and increase control around exposure to counterparties for institutions.
Ripple and LMAX Target More Efficient Stablecoin Collateral
Collateral mobility may be as critical to an institution as to the custody. Once the planned integration goes live, companies may potentially be able to keep RLUSD and apply its value throughout the LMAX trading infrastructure.
That could help to better utilize capital by eliminating the need for entities to shift capital from platform to platform. The true use cases for the ripple are where institutions want stablecoins to operate within a known and regulated financial environment, said Ripple.
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Full Collateral Integration Is Not Live Yet
Custody service is already in place; however, the RLUSD collateral functionality is still in development at LMAX.
Final documentation, successful testing, regulatory requirements, internal approvals and jurisdictional readiness remain as factors that must be considered before the companies start implementing.
The partnership brings together three separate pieces of infrastructure: Ripple’s stablecoin and XRPL settlement layer, Standard Chartered’s institutional custody platform and LMAX Group’s trading marketplace.
Completed, it would transition the stablecoin to more direct involvement of RLUSD in institutional trading and collateral management, instead of the stablecoin being limited to payments and settlement.
