- Institutional traders can eliminate exchange counterparty risks by allocating and mirroring assets from a wallet they mutually control, leveraging Fireblocks’ MPC technology and on-chain settlement.
- Off Exchange is built on the Fireblocks Network, which has secured the transfer of over $40B between institutional traders and more than 30 connected exchanges in the last 90 days.
- Hundreds of hedge funds, market makers, liquidity providers, and brokerages are currently on the waitlist to be onboarded.
New York, NY – November 28, 2023 – Today, Fireblocks – a platform to manage digital asset operations and securely build blockchain-based products – announced the launch of Fireblocks Off Exchange, the first and only solution that truly eliminates exchange counterparty risk. Off Exchange enables trading firms and asset managers to trade on centralized exchanges from an on-chain MPC shared wallet.
“We are excited to push the envelope of using innovative technology to solve the challenges of counterparty risk in digital assets,” said Michael Shaulov, CEO of Fireblocks. “Fireblocks has closely partnered with the leading institutional firms and exchanges to develop Off Exchange, introducing a fundamental shift in how to simultaneously reduce risk and increase liquidity.”
Exchange counterparty risk takes various forms, including cyber hacks, bankruptcy, commingled accounts, and misappropriation of client funds, as evidenced by the FTX incident. These risks stem from the unique structure of the crypto trading market, where exchanges play the role of both a custodian and trading venue. The outsized counterparty risks have restricted the capital that trading firms deploy on exchanges, and prevented traditional firms from entering the crypto market altogether.
Fireblocks Off Exchange leverages MPC technology to enable traders to allocate and mirror assets directly to an exchange from a wallet they mutually control, protecting their principal from hacks, bankruptcy, and fraud, while providing centralized exchanges with complete on-chain transparency that client accounts are fully collateralized. Unlike custodial solutions that transfer counterparty risk to centralized clearing parties, Fireblocks Off Exchange takes a technology-first approach, enabling traders to eliminate all forms of exchange counterparty risk by locking funds in secure MPC-based shared wallets.
“As a strong advocate for the institutionalization of the digital asset derivatives market, the need for institutional-grade security is paramount. We are pleased to be among the first users of Fireblocks Off Exchange, which mitigates exchange exposure through direct custody. This is another pivotal step forward for the industry towards a secure and capital-efficient derivatives trading ecosystem,” shared Melvin Deng, CEO of QCP Capital.
With Fireblocks Off Exchange, traders and exchanges can settle trades in real-time and move capital between venues and counterparties, allowing them to quickly capitalize on new trading opportunities.
Fireblocks Off Exchange delivers the first blockchain-native solution, providing exchanges with complete transparency to monitor and validate client collateral on-chain and enforce risk management without taking custody. This increases liquidity for traders and exchanges by eliminating the need for both parties to lock funds in a third-party cold storage solution. It also empowers trading firms and exchanges to mitigate adverse impact on funds while maximizing their capital efficiency.
“Fireblocks has taken an innovative approach that uses MPC technology to reduce client capital deposited at exchanges, while providing our business with greater liquidity and transparency,” said Luuk Strijers, CCO of Deribit. “We are excited to be the first exchange to integrate with Fireblocks Off Exchange and offer this new model of trading to a large ecosystem of institutional firms on the Fireblocks Network.”
Leading institutional trading firms like QCP Capital, Blocktech and Zerocap are using Off Exchange today to trade on Deribit. In the coming months, Off Exchange will support additional global exchanges including HTX, Bybit, Gate.io, BIT, One Trading, Coinhako, and Bitget.
Since its inception in 2018, Fireblocks has consistently strived to eliminate counterparty risk in the digital asset ecosystem, with pioneering innovations such as MPC cryptography, Non-Custodial Wallets, and the Fireblocks Network. The launch of Off Exchange marks an important milestone to further reduce counterparty risk in the crypto trading market, with an innovative approach that introduces new developments in MPC and blockchain technology.
For those interested in learning more about Fireblocks Off Exchange and the Fireblocks Network, please visit fireblocks.com.
Fireblocks, Ltd. is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks Ltd., operating from Tel Aviv, serves thousands of financial institutions, has secured the transfer of over $4 trillion in digital assets and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.