Bitget launches custody network to keep institutional assets off exchange
Bitget announced the Open Custody Network on November 5 as a connection between external banks, institutional custodians and its trading infrastructure for eligible users. The aim: allow trading on Bitget while assets remain off-exchange with third-party custodians. Security gains depend on custody control, collateralization and settlement mechanics.
Source: company release.
Why separation matters after major exchange incidents
Combining trading and custody concentrates risk across technology, operations, governance and balance sheet. Independent custody can reduce exposure if the venue lacks unilateral control over assets. Off-exchange custody is not a full guarantee: institutions must determine legal title, withdrawal authority and outcomes if the venue halts operations.
Recent incidents highlight linkage risks across components. Aave’s restriction of new tBTC activity showed that system risk can arise from how parts connect, not only the security of each part.
The operational challenge: trading without moving the coins
Venues need assurance that trades can settle. Traditional markets use clearing, collateral and regulated intermediaries. Crypto venues often simplify by holding customer assets in exchange accounts. If assets stay with external custodians, the system must reliably represent collateral and complete settlement.
Key design choices: collateral efficiency, counterparty exposure and settlement finality. A custody network is attractive if it pairs external safekeeping with a straightforward trading workflow, but protections may vary by asset and jurisdiction. Bitget’s announcement describes intent and model; it does not show that all partners offer identical services, that all users qualify or that risk is eliminated. Claims should be checked against contracts and operating history.
What institutions will want to verify
- Participating custodians and covered jurisdictions
- Method securing trading obligations: collateralization, controls and finality
- Position reconciliation process and frequency
- Asset retrieval paths if the venue or a partner fails
- Independent security assessments and enforceable segregation terms
Market direction: institutions expect separation of functions similar to traditional finance. OCN’s effectiveness will be judged by real safeguards and control over asset movements. The decisive question is who can move the assets and under what conditions.
This article was written by the News Desk and edited by Samuel Rae.
Authors credited by the source: NewsBTC Editorial Team
Published by Holder based on an external source.
