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Deribit is a leading crypto derivatives exchange, but it's unregulated
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Alex is a banker-turned-bitcoiner who ditched the bond trading desk for working remotely from all corners of the world, creating engaging and educational content for Bitcoin startups and crypto media publications. After working as a Corporate Bond Trader at Royal Bank of Scotland and a Fixed Income Salesperson at Australia & New Zealand Bank, Alex has been able to bring his deep knowledge of the capital markets into the brave new world of crypto finance.
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Updated March 05, 2024
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Investopedia’s Rating 4.1 Our Take Deribit is a leading crypto derivatives exchange offering futures, perpetual swaps, and options on Bitcoin and Ether. Several other currencies can also be traded using USDC as collateral. The exchange’s professional trading dashboard, combined with deep liquidity and low latency, has helped it become the most popular crypto options trading venue in the market. However, Deribit remains unregulated despite the emergence of numerous regulated crypto derivatives exchanges, which could lead to regulatory challenges in the future. On November 1, 2022, Deribit suffered a hack, causing the company to temporarily halt all withdrawals. The situation was quickly remedied on November 2, 2022, with the company migrating all hot wallets toFireblocks. Pros & Cons Pros Highly sophisticated trading experience Supports futures, options, and perpetuals Leading cryptocurrency options trading venue Cons Operates as an unregulated exchange Not accessible to U.S. traders Key Takeaways Specifications Table of Contents Deribit Review Pros Explained Cons Explained Introduction Company Overview Cryptocurrencies Trading Experience Fees Security Opening an Account Customer Service Customer Satisfaction Account Management Competition Methodology Unlike traditional brokerage firms, cryptocurrency exchanges are not members of the Securities Investor Protection Corp. (SIPC). Therefore, unless user terms specify otherwise, investors with cryptocurrency assets commingled on a custodial cryptocurrency exchange could potentially lose their funds as unsecured creditors. Deribit is a leading cryptocurrency futures and options exchange that enables crypto traders to execute derivatives trading strategies for Bitcoin (BTC) and Ether (ETH). Several other currencies can also be traded using USDC as collateral.. The exchange has established itself as the go-to Bitcoin options trading platform with the largest trading volumes and open interest in the market, resulting in over 85% market share of the Bitcoin options market. Investing in cryptocurrencies, Decentralized Finance (DeFi), and other Initial Coin Offerings (ICOs) is highly risky and speculative, and the markets can be extremely volatile. Consult with a qualified professional before making any financial decisions. This article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies nor can the accuracy or timeliness of the information be guaranteed. Deribit was originally established in the Netherlands in 2016 but is now headquartered in Panama. It was one of the first Bitcoin options trading platforms and has since become the largest Bitcoin options exchange by volume and open interest. Despite building a dedicated Bitcoin derivatives trading platform, Deribit added support for Ether trading in 2019 to allow users to trade all of the exchange’s derivatives contracts for both BTC and ETH.Deribit have since added support for SOL and USDC. Even though it has one of the most advanced crypto derivatives offerings in the market, Deribit hasn’t established itself as a regulated entity. While it currently isn’t required to do so, the fast-changing regulatory landscape could be a concern for Deribit users. Deribit supports 16 currencies including BTC, ETH, SOL, and USDC, as well as spot trading in BTC_USDC, ETH_USDC and BTC_ETH pairs. The platform also enables traders to buy and sell futures, perpetuals, and options on cryptocurrencies BTC and ETH. Traders can also trade perpetual swaps on several other cryptocurrencies with USDC. Additionally, the derivatives exchange allows traders to execute block trades for BTC and ETH, and SOL. Option contracts are complex financial products that could lead to a complete loss of funds. Only trade options if you fully understand the risks involved. Deribit offers a highly professional crypto derivatives trading dashboard, ideal for advanced traders. The crypto-only trading platform offers ultra-low latency pricing and trade execution, allowing users to execute complex derivatives trading strategies. Users can trade futures contracts, perpetual swaps, and options on BTC and ETH, and benefit from some of the deepest crypto derivatives liquidity in the market. Deribit also provides an abundance of market data to ensure traders have all the information they need to make the best possible trading decisions. Deribit uses a maker-taker fee model, where liquidity providers (price makers) are charged a lower trading fee than price takers. Options fees can never be higher than 12.5% of the options price. For example, if a Bitcoin option is traded at 0.0001 BTC, the taker fee will be 0.0000125 BTC (as opposed to 0.0003 BTC). Futures and options deliveries also incur a fee. The daily options and weekly futures are exempt from delivery fees. Deribit also charges a fee when positions are liquidated. Liquidation fees differ for Bitcoin and Ether. Deposits are free on Deribit, while withdrawal fees depend on the state of the Bitcoin network at the time. Bitcoin transactions are not free. Every time you send BTC, you need to pay network fees to Bitcoin miners who validate and process transactions (and thereby keep the Bitcoin network running). Fees vary depending on network activity and are typically a few dollars per transaction. During times of high network usage, fees can spike. Deribit holds over 99% of customer funds in cold storage to prevent a loss of user funds due to a cybersecurity breach. The company credits this for the November 1 , 2022 hack being "isolated & quarantined to our BTC, ETH and USDC hot wallets." Deribit also provides two-factor authentication to allow users to secure their accounts. The company also operates an insurance fund that exists to ensure winners get paid in full, and prevent losing traders being left with negative equity. Users can view the size of the insurance fund on their trading dashboard. As Deribit allows users to trade with leverage, traders can take positions that are larger than their account balances. To ensure that they do not incur a higher loss than they can afford to pay the winning party, positions are automatically liquidated when margin requirements can no longer be met. At this point, the insurance fund compensates the winning party, covering the deficit left by the losing party to ensure that the winning party receives its full payout. Deribit offers two types of accounts: Individual and Corporate. Individuals can sign up using a standard ID verification process that takes only a few minutes to complete and provides full access to the trading platform’s products and features. Corporate account holders are required to undergo a more detailed KYC procedure to comply with the exchange’s AML/KYC rules. Deribit has a straightforward signup process that’s similar to signing up for an online brokerage account. To create an account on Deribit, you’ll need to provide your email address, username, password, and country of residence. Once you confirm your email address, you can access the trading dashboard. To start trading, you’ll need to complete identity verification by sharing your name, birth date, home address, country of residence, proof of address, and government-issued ID. Deribit will also require that you confirm your identity using your device’s camera, and its software will compare your image to the photo on your government-issued ID. Once you have completed the ID verification process and your account has been verified, you can place your first order. To open a corporate account on Deribit, the onboarding process is more complicated and involves declaring who the ultimate beneficial owners (“UBOs”) and controlling individuals (e.g. directors) are. As mentioned, Deribit is not available to customers in the U.S. at this time. In addition, the company has added Canada to it's list of restricted countries. Due to Deribit's license process requirement, the KYC process now requires more details regarding a customer's financial profile, like estimated net worth and annual income in USD, the amount Deribit offers customer support via a help center, support tickets, and email. There is also a Telegram group that users can access for general questions. Like many other crypto exchanges, it does not offer phone support to users. Deribit is committed to customer satisfaction and loyalty. The exchange highlighted this when it reimbursed customers $1.3 million during a flash crash on Oct. 31, 2019. A bug in the trading platform’s BTC index calculation mechanism caused a temporary price drop from $9,150 to $7,720 before bouncing back within minutes. Deribit users can trade using the exchange’s web-based platform or via the mobile application (available for Android and iOS).Traders can also connect via the API. Deribit differentiates itself from other leading crypto exchanges by focusing on cryptocurrency derivatives. While exchanges like Coinbase, Binance, and CEX.IO aim to onboard new crypto investors and experienced traders alike, Deribit exclusively targets professional traders looking to execute derivatives trading strategies in the crypto markets. Final Verdict Deribit is a market-leading cryptocurrency derivatives exchange that allows users to trade a suite of derivatives on Bitcoin, Ether and several other currencies. Experienced and professional traders will enjoy the sophistication, fast execution, and liquidity that Deribit provides. However, the exchange’s lack of regulatory licensing may be a concern given the changing regulatory landscape of the global crypto markets. Investopedia is dedicated to helping those interested in cryptocurrency investing make informed and safe decisions. We are committed to providing our readers with unbiased reviews of the top cryptocurrency exchanges for investors of all levels. Exchanges were reviewed on points including security, fees, number of cryptocurrencies available, and more. We also considered if the exchange is regulated by a proper agency or entirely decentralized. Our full cryptocurrency exchange methodology, including the review process and weighted data points, is available for review. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Telegram. "Deribit Notifications." CoinDesk. "Bitcoin Options Volume on Deribit Already 25% of 2020 Total." https://www.coindesk.com/business/2022/11/02/crypto-exchange-deribit-loses-28m-in-hot-wallet-hack/ Deribit. "Restricted Countries." Investopediais part of the Dotdash Meredithpublishingfamily. By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. :fill(white):max_bytes(150000):strip_icc()/Deribit-e31d1b248af54e8ea97761e2974bf9c4.jpg "Deribit Review (3)")
Pros Explained
Cons Explained
Introduction
Company Overview
Cryptocurrencies Available on Deribit
Trading Experience
Fees
Trading Fees
Contracts Maker Fee Taker Fee BTC/ETH Weekly Futures -0.01% 0.05% BTC/ETH Futures & Perpetual 0.00% 0.05% BTC/ETH Options 0.03% of the underlying or 0.0003 BTC/ETH per options contract 0.03% of the underlying or 0.0003 BTC/ETH per options contract Delivery Fees
BTC/ETH Weekly Futures 0% BTC/ETH Futures 0.025% BTC/ETH Daily Options 0% BTC/ETH Options 0.015% (this delivery fee can never be higher than 12.5% of the option’s value) Liquidation Fees
BTC & USDC Futures & Perpetuals 0.75% (0.75% for maker orders and 0.70% for taker orders will be added to the insurance fund) BTC & USDC Options 0.19% of the underlying asset or 0.0019 BTC per options contract, 0.16% of the underlying asset, or 0.0016 BTC per contract is added to the insurance fund ETH Futures & Perpetuals 0.9% (0.90% for maker orders and 0.85% for taker orders will be added to the insurance fund) ETH Options 0.19% of the underlying asset or 0.0019 ETH per options contract, 0.16% of the underlying asset or 0.0016 ETH per contract are added to the insurance fund Security
Opening a Deribit Account
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intended to trade on Deribit, employment status, and industry of employment. Customer Service
Customer Satisfaction
Account Management
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How Deribit Compares to Other Cryptocurrency Companies
Methodology
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