Bitget Launches Open Custody Network to Separate Trading From Asset Storage

Bitget has introduced an Open Custody Network, a service designed to link outside banks and institutional custodians to its trading infrastructure so that eligible users can trade without holding assets directly on the exchange.

The company announced the network, known as OCN, in a release on 5 November, according to NewsBTC. The move puts Bitget among the trading venues trying to address a long-standing weakness in how centralised crypto exchanges operate: the bundling of execution and safekeeping under one roof.

What Bitget announced

Bitget describes OCN as a connection layer between three parties: external banks, institutional-grade custodians and its own trading systems. The stated aim is to let qualifying customers place trades through Bitget while their assets remain with a separate custody provider.

The service is aimed at eligible users rather than the exchange's entire customer base, and the framing points clearly towards institutions. Larger investors such as funds, trading firms and corporate treasuries typically face stricter requirements on where assets can be held and who controls them, and many are reluctant to leave significant balances sitting in an exchange wallet.

The source material does not set out which banks or custodians are participating, what eligibility criteria apply, or how fees and settlement windows will work. Those details will determine how useful the network is in practice.

Why combining trading and custody is a problem

The largest crypto exchanges have historically offered trading and custody as a single service. For customers, that model is simple. Deposit funds, trade instantly, withdraw when needed, all within one account.

The drawback is concentration of risk. When an exchange holds client assets and runs the order book, a customer is exposed to that one company's technology, internal controls, governance and financial health. If the platform fails, is hacked or halts withdrawals, users can lose access both to the ability to trade and to the assets themselves.

Traditional finance tends to separate these functions. Brokers execute orders, clearing houses manage settlement and counterparty risk, and custodians hold securities, often with regulatory rules on segregating client property. Each layer has its own oversight, and the failure of one participant does not automatically put client assets elsewhere in the chain at risk.

Crypto markets grew up without much of that infrastructure. Exchanges filled the gap by doing nearly everything themselves, which made them fast and accessible but also made them single points of failure. Industry interest in so-called off-exchange custody has grown after a series of exchange incidents, as institutions look for ways to keep trading on centralised venues without handing over full control of their holdings.

Off-exchange custody is not a guarantee

NewsBTC cautions that labelling an arrangement as off-exchange custody does not by itself make it secure. The real protection depends on the precise design of the custody and settlement process.

A structure that keeps assets with a third party can still contain features that reintroduce exposure to the trading venue. These may include settlement obligations that require assets to move on a schedule, pre-authorised transfers that let the exchange pull funds under certain conditions, credit lines extended against custodied collateral, or service providers shared between the custodian and the exchange.

For institutions assessing OCN or any similar model, the questions are practical and legal:

• Who holds legal title to the assets while they sit with the custodian
• Who has the authority to initiate a withdrawal or transfer
• What happens to positions and collateral if the trading venue suspends operations
• Whether any credit or settlement arrangement gives the exchange a claim on custodied assets

The answers determine whether separation is substantive or largely cosmetic. If the exchange retains the ability to move assets unilaterally, the customer's exposure to the exchange may be reduced less than the branding suggests.

The risk often lies in the connections

NewsBTC links the timing of these concerns to recent security incidents in the sector. It points to its own reporting on Aave restricting new tBTC activity as an example of how risk frequently arises from the way separate components are linked, rather than from a flaw in any single piece.

That lesson applies directly to custody networks. A custodian may have strong security, and an exchange may run a well-tested matching engine, but the integration between them, including messaging, authorisation flows and reconciliation, creates new surfaces where things can go wrong. The more parties involved, the more interfaces there are to secure and the more important it becomes to understand who is responsible when something breaks.

The operational challenge of trading without moving coins

There is also a technical tension at the heart of the model. Fast trading venues need confidence that every trade can be settled. If a customer buys, the exchange must know the funds exist; if they sell, it must know the assets can be delivered.

Traditional markets handle this through clearing, collateral requirements and regulated intermediaries that stand between counterparties. Crypto exchanges have mostly sidestepped the problem by holding assets directly, which makes settlement an internal bookkeeping entry rather than a transfer between institutions.

Once assets remain with an external custodian, that shortcut disappears. The system needs a dependable method for representing collateral on the exchange and completing settlement between the custodian and the venue. Typically this involves the custodian confirming or locking a balance, the exchange extending trading capacity against it, and the two sides reconciling positions periodically. Each of those steps involves trade-offs between speed, capital efficiency and safety.

If settlement happens infrequently, the exchange carries more exposure between cycles and may demand more collateral. If it happens frequently, operational costs rise. How Bitget and its partners balance these factors will shape both the safety and the commercial appeal of the network.

What to watch next

The immediate question is which banks and custodians join OCN and on what terms. The identity, regulatory status and jurisdiction of partners will matter greatly to institutional clients weighing whether the arrangement meets their own compliance needs.

Observers will also look for detail on legal structure: whether assets are held in segregated accounts in the customer's name, what rights the exchange has over them, and how disputes or insolvency scenarios would be handled. Published documentation on these points would allow independent assessment of how much risk the model actually removes.

Another signal will be uptake. Institutional demand for off-exchange arrangements has been a recurring theme, but adoption depends on whether the extra protection comes at an acceptable cost in fees, capital efficiency and execution speed.

Finally, the launch may add pressure on other large exchanges to offer comparable options. If separating trading from storage becomes an expectation among institutional clients, venues that continue to insist on holding assets directly may find it harder to compete for that business. Whether OCN delivers meaningful separation, rather than a reshuffling of the same risks, will only become clear as its design details emerge.