Deribit has announced support for hybrid custody solutions that allow for quicker onboarding of third-party custodians and brokerages for capital markets traders.
Deribit provides traders with the freedom to choose where their assets are stored – on the exchange or with one of its many partner custodians, some of which use a hybrid model.
Fidelity Digital Assets, Copper Securities, and Zodia utilize hybrid model at Deribit
Custody firms set to utilize the hybrid model include Fidelity Digital Assets, Copper Securities, and Zodia. Deribit is in talks to onboard others later this year.
The current third-party custodians are already fully integrated with the exchange, allowing traders to leverage all of Deribit’s trading capabilities via an API without the funds ever needing to leave their account.
The hybrid custody model reduces onboarding time as custodians can offer Deribit as a trading venue without needing full integration, giving traders using the custody firms mentioned above access to the Deribit trading platform.
Members will need to deposit 20% of their total assets on Deribit by default
In a hybrid model, Deribit traders leveraging a custodian that isn’t integrated with the exchange will have to store a percentage of assets on the exchange to meet collateral requirements, while the rest will be secured by their custodian of choice.
Members will need to deposit 20% of their total assets on Deribit by default, but this number is subject to change depending on trading activity, exposure, risk profiles, and market conditions. Daily settlements of profit and loss occur within the Deribit platform.
“A hybrid custody model marks a significant step forward”
Luuk Strijers, CEO of Deribit, said: “At Deribit, we are committed to continually innovating and meeting the evolving needs of our institutional members and make it easier for all to access crypto derivatives markets. Throughout 2024, we have continued to focus on our institutional clients to create a fulsome trading experience in the broader finance ecosystem. Supporting a hybrid custody model marks a significant step forward, providing enhanced flexibility for accessing Deribit’s world-class digital asset derivatives trading offerings. By allowing for a hybrid model with these external custody solutions, we empower our clients while maintaining the seamless trading experience Deribit is known for.”
Jason Urban, Global Head of Trading at Galaxy, commented: “Institutional adoption of digital assets is rapidly evolving, and Deribit’s new hybrid custody model is a significant leap forward in that journey. At Galaxy, we recognize the importance of providing institutional investors with the flexibility and security they need to navigate this space confidently. Deribit’s commitment to integrating with top-tier custodians aligns with our vision of a mature and robust digital asset ecosystem, where innovation and trust are paramount.”
Luke Cuthill, Director of Business Development at Fidelity Digital Assets, said: “Derivatives exchanges are an important part of efficient capital markets, and the demand from institutional investors for access to such venues continues to grow. Fidelity Digital Assets is dedicated to delivering robust infrastructure and liquidity for our clients, and our connectivity to Deribit as they roll out third-party custody is a significant milestone in that journey.”
