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Institutional Crypto Custody: Reserves, Margin, Settlement, and Self-Custody

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Summary

The document outlines five custody approaches for institutional crypto clients: exchange custody, affiliated regulated custodians, third-party custodians, off-exchange settlement, and self-custody. It describes exchange custody in terms of reserve verification, wallet security, and trading capital efficiency. The proposed proof-of-reserves process uses a Merkle-tree technique to let clients check assets against customer liabilities; the company also says most assets are held in cold storage. These are descriptions of the provider’s own offerings and claims, not independent assessments of solvency or security.

For trading, the roadmap describes a unified account that pools access to spot, derivatives, and options under different margin modes, along with borrowing tools. Off-exchange settlement is presented as a way to make assets held in a client’s own custody available for trading without pre-funding an exchange account, potentially reducing counterparty and timing risks. Dedicated institutional addresses are another proposed self-custody option. Several regulated custody and settlement services are described as under development or consideration, so the article documents a product roadmap rather than measured results or a comparative evaluation.

Key ideas

  • Institutional custody can be organized across exchange, regulated third-party, off-exchange, and self-custody arrangements.
  • Merkle-tree proof-of-reserves methods can let clients verify reported assets against recorded liabilities.
  • Unified accounts and pooled margin modes can support trading across spot and derivatives instruments.
  • Off-exchange settlement aims to make client-held collateral usable for trading while reducing pre-funding needs.
  • The roadmap includes planned services, so its descriptions do not establish that those services were delivered or independently validated.

Tags

CryptoRisk managementExecutionMarket microstructure

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.