Bybit partners with Fireblocks to reduce counterparty risk
Bybit, a leading cryptocurrency exchange in terms of volume, has revealed a partnership with Fireblocks, a company specializing in digital asset management and blockchain innovation, as disclosed to Finbold on June 18.
The collaboration will see Bybit incorporating Fireblocks’ Off Exchange solution to minimize counterparty risk for institutional trades.
Fireblocks’ Off Exchange solution enables institutional clients to interact with centralized exchanges (CEXs) through an on-chain multiparty computation (MPC) wallet, effectively reducing risks associated with counterparty exchanges.
The integration will utilize MPC technology to allow traders to allocate their assets directly to an exchange from a jointly controlled wallet, ensuring asset protection in the event of hacks, bankruptcy, and fraud, while also guaranteeing full collateralization of client accounts.
Bybit aims to enhance its security measures to meet the evolving demands of institutional traders through the implementation of Off Exchange. Eugene Cheung, Head of Institutions at Bybit, emphasized the company’s commitment to providing secure enterprise solutions, stating:
“At Bybit, we are dedicated to building trust within the crypto industry and improving the security of institutional trades. The integration of Fireblocks Off Exchange provides increased on-chain transparency and a reliable trading environment, reinforcing trust and confidence for our customers. By partnering with Fireblocks, we demonstrate our steadfast commitment to ensuring the safety of institutional assets, a top priority for us.”
The benefits of Fireblocks’ Off Exchange for institutional clients include the secure lock and mirror of assets to the connected exchange through MPC wallets, as well as the secure locking of funds in collateral vault accounts (CVAs) to prevent unauthorized access or asset loss. Additionally, the blockchain-native system ensures real-time on-chain settlement, recording transactions and asset movements on the blockchain, enhancing transparency and traceability for both the platform and its institutional clients. Clients can withdraw assets to other venues or wallets once the CVA is rebalanced, optimizing capital allocation and facilitating trading activities to increase liquidity for both clients and the exchange.