Deribit sets up crypto exchange battle with push into free trading

Crypto derivatives exchange Deribit is launching free trading of bitcoin and other tokens, setting up a fresh price war among digital asset exchanges as they seek to re-emerge after a bruising year for the industry.

The Panama-based group, the world’s biggest crypto options exchange, will begin direct trading in three of the most popular cryptocurrency pairs from next week and waive the fees.

Its move underscores how competition is heating up among crypto exchanges as they try to entice institutional investors keen to get into a rising market after the crash in digital asset prices last year and the failure of industry bellwether FTX. Around 90 per cent of Deribit’s customers are institutional clients.

Popular coins such as bitcoin and ether have outperformed assets such as stocks and commodities this year, rising 50 per cent and 65 per cent respectively.

It also comes a month after Binance, the world’s largest marketplace for crypto trading, ended a six-month foray into zero-fee trading, a move that accelerated its market share.

Luuk Strijers, chief commercial officer at Deribit, said the exchange’s move into spot trading was driven by customer demand.

“You would have to buy ether on Binance instead of Deribit,” he said, adding: “If you want to convert $5mn [into bitcoin], for example, we would have to tell you to go elsewhere, which is terrible customer service.”

“In order to have a proper derivatives offering you also need to have spot,” he added.

Big-name money managers have continued to explore digital assets and monetise investor interest in the past year, even as the industry suffered a confidence crisis and many companies failed.

“Serious institutional players remain committed and, in fact, see the open space after the demise of multiple crypto-native players as an opportunity.” Bernstein analysts wrote this week.

Deribit will offer free trading in pairs of ether and bitcoin, and ether and bitcoin against the stablecoin USDC, which is operated by Circle. US-listed Coinbase charges up to 0.6 per cent for a trade, for example.

Strijers added that trading on the three pairs would remain free to trade “for the foreseeable future” and that future tokens that might be added would have a charge.

The market share of Binance soared by a fifth after launching fee-free trading in 13 coins and at reached nearly two-thirds of total volume on the exchange, according to data provider Kaiko. However the exchange’s lead fell back after it reintroduced charges.

Deribit added that it was looking to use spot trading as an entry for customers to trade options and futures. Strijers said this would “service our existing client base and potentially attract some new clients who then . . . will also trade options, futures or perpetual [futures]”.

Deribit was founded in 2016 and is backed by investors including crypto venture firm 10T Holdings and trading firm Akuna Capital.