Custody Policy

Deribit FZE (“Deribit”) is a Dubai incorporated company that operates Deribit, a trading platform on which customers can trade Virtual Assets and derivative products on selected Virtual Assets.

Deribit itself does not engage in any trading activity on the trading platform, other than for treasury and risk management purposes.

The following products can be traded on Deribit:

These products can be traded on different Virtual Assets, including but not limited to, Bitcoin, Ether and USDC.

Deribit’s derivatives trading product is made available to Qualified and Institutional Investors, while Deribit’s spot trading product is available to Retail, Qualified and Institutional Investors alike.

Price-time priority

For its Exchange product Deribit operates a central limit order book in which orders from customers will be matched according to the price-time priority principle, meaning that orders with the highest bid and lowest offer at a certain point in time will be placed at the top of the order book. Orders with the same bid and offer prices will be prioritised according to the time that they were entered in the order book.

For its Broker-Dealer product, Deribit routes spot orders received on the platform to Coinbase Exchange (CBE) for execution. Orders routed to CBE are executed on a price-time-priority basis by CBE’s matching engine.

Posting of margin and depositing assets

Margin to enter into or maintain a position in a derivative product on the trading platform needs to be maintained in the currency of the underlying contract, e.g. Bitcoin.

The firm currently does not accept any fiat currency on its trading platform. This means in order to post initial or variation margin, customers must buy the relevant Virtual Assets on an external Virtual Assets exchange such as Binance, and then transfer the acquired Virtual Asset to its digital wallet that is maintained with Deribit. It is also possible to use the Deribit platform to buy Virtual Assets from a third-party (e.g. Banxa or Legend Trading) which then will be transferred to the Deribit account.

For Deribit’s derivatives product, all contracts are cash-settled in the underlying Virtual Asset where all settlement obligations will be payable in the underlying Virtual Asset, with the amount payable depending or fluctuating on the value of the underlying Virtual Asset at the time of settlement.

For example, if a customer were to enter into a futures contract to buy 1 bitcoin in three months at $50,000 per bitcoin, but the bitcoin were to rise to $60,000 at the expiry date of the contract, then Deribit would settle and pay $10,000 worth of bitcoin to the customer.

Although Deribit has no clearing house or clearing members connected to it, it does offer quasi-clearing services in the form of an insurance fund. Deribit acts as a settlement agent between the trading counterparties. In case a trading counterparty defaults on its obligation, the insurance fund will ensure that the financial obligations of the defaulted trading member are met vis-a-vis its trading counterparties. The moment the insurance fund is depleted, the financial obligations of the defaulting trading member are, as per our Exchange Terms, via a system of 'socialised losses' born by other 'winning' trading participants on the platform during that trading day.

Customers are required to deposit underlying Virtual Assets as initial and variation margin when they enter into derivative contracts on Deribit’s trading platform, or deposit Virtual Assets for spot trading. These Virtual Assets must be held in a digital wallet that is held with Deribit or in a custody model selected from the available options. The custody arrangements are described in more detail in the section below.

To trade in the products (e.g., options, futures, or spot trading) offered by Deribit, clients need to fund their account. Clients can deposit supported Virtual Assets detailed on the Deribit website. While clients cannot, at this time, deposit or transfer fiat currency into their account on Deribit, clients have the option to exchange one Virtual Asset for another through spot trading.

Deribit uses third-party custody and technology service providers for self-custody as outlined on Deribit’s website, in a multi-wallet purpose-built architecture. Client deposits are received in designated wallet addresses uniquely assigned to each client.

Deribit offers clients three types of custody solutions:

Custody by Deribit

Deribit maintains three types of wallets to hold client funds:

To mitigate the risk of theft, fraud, hacking and misappropriation, the majority of client assets are stored in cold wallets with offline signing. Only a small balance is held in a hot wallet, and it is used to support withdrawal operations. The designated hot wallet for withdrawals does not receive deposits from external sources (i.e. clients). Funds are sent to the withdrawal wallet by Deribit’s custody operations team only when the balance needs to be replenished. The remaining client assets are held in warm wallets, which act as an operational liquidity hub for platform operations and for settlements with third-party custodians and clients using integrated self-custody solutions.

The warm wallets are operated manually by a select number of employees, of which a limited few can initiate transactions. These transactions, based on the size and destination, are approved by an operational consensus of selected employees. Balances in the hot and warm wallets are kept to the minimum needed to operate securely and to meet withdrawals, so that cold wallets do not need to be accessed frequently.

4.1.1.1 Hot wallet

The hot wallet is used to facilitate client withdrawals. The balance held there is limited to what is needed for withdrawal activity.

Withdrawals

The following process is followed in relation to withdrawals:

4.1.1.2 Warm wallet

Deposits are received into warm wallets as follows:

Clients do not hold the public or private keys associated with the addresses.

Otherwise, the warm wallets are used to replenish the hot wallet if withdrawal requests exceed the withdrawal wallet balance. When the balance in the warm wallets exceeds the level set by Deribit, the excess is transferred to the cold wallets.

The warm wallet is subject to the following security protocols:

4.1.1.3 Cold wallet

The cold wallet is used to keep the majority of customer funds safe from unauthorised users. Deribit uses Coinbase Prime Custody cold wallets as well as Fireblocks technology for self-custody, MPC, sharded, offline private key system to ensure that the required keyshares for signing are distributed to prevent unauthorized access to the assets stored in cold wallets. This decreases the risk of theft, targeted attacks or loss of funds due to lost access to the key. Additionally, Deribit has implemented a strict multi-layer Transaction Authorization Policy that governs the signing process of the transactions.

Signing capability on the cold wallets is limited to very few personnel complemented with the approval requirement of multiple other staff.

The present section describes how Deribit manages external custody arrangements under which client Virtual Assets and collateral are held outside the Deribit platform through approved external custody structures. These arrangements support client trading activity while allowing collateral to be held and managed outside the Deribit platform. Despite being held externally, these assets remain recognised and managed within Deribit’s operational processes and related monitoring, reconciliation, and reporting.

Deribit publishes the available third-party custody solutions for its clients on its website. The content of this webpage outlines the features of each custody option, including all relevant legal documentation and applicable terms. Third-party custodian and self custody set ups are not exempt from socialized losses.

External custody arrangements are grouped into integrated and non-integrated custody models:

Off-exchange Custody

In the Off-exchange Custody model, client Virtual Assets are held with one or more third-party custodians. Deribit operates omnibus or trust-collateral accounts in its own name at the custodian. Each client holds a delegated balance linked to their Deribit user ID (UID), representing their share of the collateral held externally. Where Client Virtual Assets are held through an omnibus or pooled structure, such structure is used for operational and settlement efficiency only and does not alter the client’s entitlement to the relevant amount and type of Virtual Asset, as recorded in Deribit’s books and records and, where applicable, the custodian’s records. As part of the daily custody settlement cycle, Deribit and the custodian exchange net settlement instructions to reconcile positions.

Key definitions used in this model:

Off-exchange Multi-custody

The Off-exchange Multi-custody model follows the same core third-party custody logic as the Off-exchange Custody model, but extends it to arrangements involving an intermediary custodian and one or more underlying or sub-custodians. In practice, this means that Deribit may rely on an existing custody and clearing arrangement at an intermediary custodian while assets or settlement flows may also involve another custodian.

Key definitions used in this model:

Off-exchange Self-custody (FBOE)

The Fireblocks Off-Exchange (FBOE) model is the Deribit self-custodial off-exchange model. Unlike the standard third-party custodian models, FBOE does not rely on omnibus or trust-collateral accounts. Instead, clients hold their assets directly in Fireblocks self-custody Collateral Vault Accounts (CVAs) within their own Fireblocks environment. Deribit holds a signing keyshare in each client's CVA, which allows Deribit to enforce settlement transactions. The model is managed operationally through settlement instruction timing, client approval logic, and alert-driven exception handling.

Key definitions used in this model:

Hybrid 80/20 ACA model

The Hybrid 80/20 ACA model is a non-integrated external custody model. Under this arrangement, the majority of a client's collateral, typically up to 80%, is held off-platform in a jointly controlled wallet at a third-party custodian, governed by an Account Control Agreement (ACA) and a supplementary agreement. The remaining portion, typically a minimum of 20%, is held on-platform at Deribit (or another integrated custody option) to support daily trading, margining, and settlement.

The off-platform portion is recorded in Deribit as external equity and is monitored through ratio-based oversight, rather than through the standard daily funding and settlement cycle.

Key definitions used in this model:

In the structures and Virtual Asset flows outlined above, the funds held at the various custodians and delegated to Deribit, in FBOE CVA, as well as in Deribit’s own wallets at the custodians for settlement purposes, form part of the Client Virtual Assets pool.

Access for personnel involved in Deribit’s custody operations is granted based on the principle of least privilege which is reviewed on a quarterly basis as part of SOX controls.

Process specific access configuration

Please note that automated processes are executed by API keys without human involvement and without any direct human access.

User withdrawals:

A group of select staff globally has a varied level of access to perform this action. This control is put in place to ensure full coverage across global timezones. Staff involved are from various functions: leadership, head of custody, finance, risk, customer support and sales.

Controls

Configurations across all solutions used in the custody architecture include quorum based configuration of transaction authorization policies (based on destination, accumulation of amount and time, etc.), whitelisting, and quorum based addition of new users. Administrative quorum members consist of leadership, head of custody, risk and finance staff.

The only transactions that are processed to non-whitelisted addresses are user withdrawals and recovery cases.

Where required, hardware device configuration is undertaken with CCSS standards, supervised and documented by Security.

For physical materials, chain of custody is documented and evidenced on a tracking tool.

For Fireblocks workspaces, recovery material is stored by Coincover. Release of the recovery material is based on a quorum approval of leadership members only. Owner passphrases are stored in physical and digital form, in secure vaults across multiple geographical locations accessible only by 3 leadership members. The recovery procedure is tested and documented by the Security team.

For third party custodians, private keys, recovery material and disaster recovery procedures are managed and controlled by the custodians.

The CISO will regularly assess the security of Deribit’s information technology systems and software integration with external parties and ensure that appropriate safeguards are implemented in order to mitigate risks.

The CISO’s ongoing review must ensure that Deribit is safeguarding access to Virtual Assets in accordance with industry best practices and, in particular, to ensure that there is no single point of failure in Deribit’s access to, or knowledge of, Virtual Assets held by Deribit.

Any safeguards implemented will be reported to the Board and the Internal Auditor and shall be reviewed by the third-party auditor as part of the annual audit.

Private keys and recovery material is produced for self-custodial wallets, following strict security policy in line with CCSS standards.

Recovery material is stored with a Trusted Third-Party provider, as well as distributed in secure company vaults in multiple geographical locations in digital and physical forms. Access to the vaults is restricted to minimal staff. If an individual leaves Deribit, steps will be taken to ensure that the individual’s access is revoked immediately and no later than 24 hours of the individual’s notice of resignation. In addition, Deribit must ensure that key generation processes ensure that revoked signatories do not have access to the backup seed phrase or knowledge of the seed phrase used in the key’s creation.

An audit of access permissions is performed on a quarterly basis.

Deribit maintains an appropriate Access Control Register in order to keep track of individuals who:

The Compliance Officer is responsible for keeping the Access Control Register up to date.

All client funds are held in Deribit’s hot, warm and cold wallets as described in section 4.1.1.

Company assets are held segregated from client assets in the books and records on a real time ledger and segregated to separate on-chain wallets daily. Deribit does not treat Client Virtual Assets as proprietary assets and does not use them for its own trading. Legal title and beneficial ownership of Client Virtual Assets remain with the client and do not transfer to Deribit merely because the assets are held in custody, pooled operationally or posted as margin, except to the limited extent of any agreed security interest exercisable in accordance with applicable law. Client Virtual Assets are not intended to form part of Deribit’s insolvency estate.

Deribit applies legal, operational and contractual safeguards designed to protect Client Virtual Assets in the event of an operational disruption or insolvency affecting Deribit or another relevant entity in the custody chain. Deribit maintains both legal segregation and operational segregation of Client Virtual Assets through its account structure, books and records, wallet architecture, access controls and reconciliation processes.

If a material operational disruption, security incident or insolvency-related event affects custody operations, Deribit will apply its books and records, reconciliation controls and applicable custody arrangements to identify client entitlements and manage the return, release or transfer of Client Virtual Assets to the extent possible, subject to applicable law, margin requirements, close-out procedures, and the limitations, risk allocation and liability provisions set out in the applicable client terms.