Bitget Launches Open Custody Network for Trading Without Exchange Custody

Bitget has now introduced the Open Custody Network (OCN), which enables eligible users to trade cryptocurrencies on the exchange's spot, margin, and futures markets while retaining custody of their assets at independent banks and custodians. As per the company's November 5 announcement, the new network will connect external custodian firms to Bitget's trading engine through a mirroring mechanism of assets that allows traders to enjoy liquidity provided by the exchange without depositing their assets into the exchange's custody. The platform offers a solution to market makers and asset managers who wish to keep their custody firms unchanged but trade using their assets.

Bitget Integrates Multiple Institutional Custodians Through Its Asset-Mirroring System

According to Bitget, the network would provide flexibility for the eligible participants to store their money and make use of it for implementing various kinds of trading strategies. The introduction comes in the wake of the already present custody infrastructure provided by Bitget, which already allows for support from various third-party providers and settlement solutions. This comes at a time when banks and cryptocurrency exchanges are busy developing products that can help them separate storage from trading services.

Through asset mirroring, The OCN links the assets held by the participating custodians with those trading at Bitget to enable eligible users to trade supported markets through an infrastructure where their collateral is not on the exchange. In the traditional centralised exchange model, users typically transfer their cryptocurrencies to wallets operated by the trading platform before placing orders. The participating custodians can have custody of their assets from third parties while still being able to use Bitget's trading facilities with the new model.

This includes spot, margin, and derivatives trading, but the products accessible to retail traders will vary based on the chosen custodian and settlement model that applies to them. Prior to the launch announcement, Bitget had previously announced institutional custody partners on October 13 in an operational update. These include Copper ClearLoop, Cactus Custody Oasis, Fireblocks Off Exchange, OSL MirrorEX, Bitfire PrimeMirror, and Sygnum Protect. The arrangements operate under different models for settlement, with some custodians allowing traders to trade against their mirrored balances while others have funding systems through custodial services.

According to Bitget, the purpose of the network is to assist organisations in managing the concentration of assets through trading platforms without compromising liquidity and trading strategies. Collateral services that are offered by market makers and asset management companies require liquidity. By using custody providers to connect the eligible firms, the firm will maintain its existing asset management and approvals while connecting to the execution services of Bitget.