Copper Technologies: Institutional-Grade Crypto Infrastructure

Overview of Copper Technologies

Copper Technologies sits at the intersection of two institutional imperatives that have defined the maturation of digital asset markets: the need for banking-grade custody of digital assets and the need to trade those assets on exchanges without accepting exchange counterparty risk. Copper’s founding insight — that these two requirements are in direct conflict with each other using conventional crypto infrastructure, and that resolving the conflict is worth building a company around — has proven commercially sound.

Founded in 2018 by Dmitry Tokarev, Copper has grown from a custody-focused startup into a comprehensive institutional prime brokerage infrastructure provider with significant Swiss operations under FINMA supervision, a global institutional client base spanning hedge funds, asset managers, and institutional trading firms, and a defining product — ClearLoop — that has materially altered the risk profile of institutional crypto trading.

The Founding Problem: Exchange Counterparty Risk

The fundamental problem that Copper was designed to solve predates FTX by years but was validated catastrophically by it. In conventional crypto market structure, a trader who wants to trade on an exchange must deposit assets with that exchange. The exchange holds the trader’s assets as a custodian while the trader’s positions are open. If the exchange fails — whether through fraud, mismanagement, or market stress — the trader’s assets are at risk.

This structure is unlike traditional financial markets in an important respect. When an equity trader places an order through a broker to buy shares on a stock exchange, the shares settle to the broker’s custody account through a central securities depository — they are never held by the exchange itself. Counterparty risk in equity trading is managed through the CCP (central counterparty clearing house) structure, which interposes itself between buyer and seller to guarantee settlement. The exchange is a venue; the CSD is the record-keeper; the CCP is the risk absorber.

Pre-ClearLoop crypto market structure collapses all three functions into the exchange: exchanges held assets, matched orders, and settled trades without an intermediating CCP or CSD. This is why the FTX collapse resulted in client asset losses — FTX was simultaneously the venue, the custodian, and the counterparty, with no structural firewall between its own proprietary activities and client assets.

ClearLoop is Copper’s solution to this problem.

ClearLoop: Off-Exchange Settlement at Scale

ClearLoop is a pre-settlement and settlement network that allows institutional traders to trade on crypto exchanges without depositing assets with those exchanges. The mechanics are as follows:

Step 1: Asset custody. The institutional client deposits digital assets with Copper’s custody infrastructure. Assets remain in Copper’s FINMA-supervised custody throughout the trading lifecycle, never transferred to the exchange.

Step 2: Credit mirroring. ClearLoop mirrors the client’s custody balance as available trading credit on partner exchanges. From the exchange’s perspective, the client has available balance to trade against. In reality, the client’s assets are in Copper’s custody.

Step 3: Trade execution. The client executes trades on the partner exchange using the mirrored credit. Positions accumulate in the client’s exchange account.

Step 4: Net settlement. At the end of each settlement period (typically daily), net positions are settled between Copper and the exchange through the ClearLoop network. Only the net difference between the client’s settled positions and their opening position is actually transferred. If the client has made net gains, the exchange pays Copper, which credits the client’s custody account. If the client has made net losses, Copper pays the exchange from the client’s custody balance.

The risk reduction is structural: the client’s assets are never at exchange risk. Even if a ClearLoop partner exchange collapses during the trading day, the client’s principal is protected — only the net settlement amount (the mark-to-market gain or loss) is at risk, not the full principal.

For institutional traders running large crypto portfolios, the difference between full principal at exchange risk and only daily net settlement at exchange risk is the difference between an acceptable counterparty risk profile and an unacceptable one. ClearLoop makes institutional crypto trading compatible with the risk management requirements of hedge funds, asset managers, and institutional desks that could not previously justify exchange-custody arrangements.

ClearLoop Partner Exchange Network

The value of ClearLoop depends directly on the number and quality of exchanges connected to the network. An institutional trader using ClearLoop can only trade on exchanges that are ClearLoop partners; the network’s utility is a direct function of its reach.

Copper has built ClearLoop integrations with the most significant institutional crypto trading venues globally, including Deribit (the dominant institutional options exchange), Binance (the world’s largest exchange by volume), OKX, Bybit, and several other major venues. The exchange network continues to expand as ClearLoop’s institutional adoption grows and exchanges compete for the institutional flow that ClearLoop-connected clients represent.

For the exchanges themselves, ClearLoop participation is attractive: it brings institutional clients who might otherwise be reluctant to deposit assets directly with the exchange. ClearLoop effectively converts exchanges’ counterparty risk from a barrier to institutional participation into a managed, transparent settlement arrangement. This dynamic creates a virtuous cycle: as more institutional clients use ClearLoop, more exchanges seek to join the network, which in turn attracts more institutional clients.

FINMA-Supervised Swiss Entity and Regulatory Architecture

Copper’s Swiss entity — Copper Technologies AG — is registered and supervised under FINMA as an authorised financial intermediary, providing the regulatory standing for Copper’s Swiss operations to serve FINMA-supervised institutions. The Swiss entity’s FINMA authorisation meets the outsourcing requirements of Swiss banking law: when a Swiss bank uses Copper’s custody or ClearLoop infrastructure, it is engaging a FINMA-supervised counterparty, satisfying the regulatory requirement for material function outsourcing.

The Swiss entity provides Copper with access to Switzerland’s institutional digital asset ecosystem, which is among the deepest in Europe. Swiss hedge funds, family offices, digital asset funds domiciled in Zug’s Crypto Valley, and international institutional clients with Swiss operations are all natural Copper clients for whom the Swiss entity’s FINMA standing is an essential compliance consideration.

The UK Regulatory Episode

Copper’s relationship with the UK Financial Conduct Authority has been more complex. Copper initially registered with the FCA under the UK Money Laundering Regulations for cryptoasset businesses, obtaining registration in 2022. In August 2023, Copper withdrew its FCA registration application and communicated to clients that it would reapply following updates to its UK regulatory strategy.

The withdrawal attracted attention in the digital asset industry, where FCA registration withdrawals had been associated by some commentators with compliance difficulties. Copper’s communications emphasised that the withdrawal was strategic — reflecting a decision to restructure its UK regulatory approach — rather than indicative of any compliance failure. The company has continued to operate UK-facing institutional services through its Swiss entity during the reapplication period.

The FCA’s demanding cryptoasset registration regime — which rejected or caused the withdrawal of approximately half of all applicants during the 2020–2023 period — has created compliance challenges for many legitimate businesses. The FCA’s standards, while rigorous, reflect the authority’s experience with consumer harm in crypto markets and its determination to apply Tier 1 regulatory standards. Copper’s reapplication process reflects the normal friction of operating in the UK’s demanding regulatory environment rather than any fundamental compliance issue.

MPC Custody Technology

Copper’s custody infrastructure is built on multi-party computation cryptography, with a particular focus on the operational requirements of institutional traders who need fast, programmatic transaction authorisation rather than the slow manual processes associated with traditional cold storage.

Copper’s MPC implementation supports:

Sub-minute signing: Transaction authorisation can be completed in under a minute for pre-approved transaction types, supporting the real-time settlement requirements of ClearLoop.

Configurable approval workflows: Institutional clients can configure multi-level approval hierarchies — requiring, for example, two of three designated approvers from the client’s side plus Copper’s counter-signature for transactions above a specified threshold.

Multi-blockchain support: Copper’s custody supports all major blockchain networks, with on-chain interaction capabilities including staking, lending, and protocol participation where clients require active asset management alongside custody.

API integration: Copper provides institutional-grade APIs that allow clients to integrate custody and ClearLoop functions into their own trading infrastructure, portfolio management systems, and risk management platforms.

Institutional Client Base

Copper’s institutional client base is concentrated in the segment that ClearLoop serves most naturally: active institutional traders with significant digital asset portfolios who need both custody and trading infrastructure.

Crypto hedge funds: Copper’s earliest and most natural institutional clients, crypto hedge funds using systematic and discretionary strategies benefit most directly from ClearLoop’s counterparty risk reduction. A fund running twenty exchange relationships can consolidate its principal custody at Copper while maintaining trading credit on all twenty exchanges.

Traditional hedge funds with crypto allocations: As macro funds, multi-strategy funds, and quant funds have added crypto to their portfolios, their prime brokerage requirements for crypto have created demand for Copper’s model — which mirrors the prime brokerage/execution separation familiar from equity markets.

Asset managers: Asset management firms with dedicated digital asset mandates require institutional-grade custody integrated with execution capabilities, a requirement that Copper’s end-to-end infrastructure meets.

Swiss institutional clients: Family offices, digital asset funds domiciled in Crypto Valley, and institutional investors managing Swiss-domiciled portfolios are a natural client segment for Copper’s FINMA-supervised Swiss entity.

$196 Million Series C and Capital Structure

Copper raised a $196 million Series C funding round in 2022, led by Tiger Global Management with participation from several other significant investors. The fundraise, completed before the 2022 crypto market downturn, provided substantial capital for product development, geographic expansion, and regulatory compliance investment.

The timing of the Series C — preceding the FTX collapse — positioned Copper to benefit from the institutional flight to quality that followed November 2022. As institutional participants examined their crypto infrastructure arrangements following FTX, ClearLoop’s value proposition became dramatically more apparent. Copper has reported significant growth in institutional client onboarding through 2023 and 2024 as the FTX aftermath drove institutional reassessment of exchange counterparty risk.

How ClearLoop Fundamentally Changes Institutional Crypto Risk

The significance of ClearLoop extends beyond Copper’s business model to the structural risk architecture of institutional crypto markets. By separating custody from trading access, ClearLoop enables the emergence of a market structure that more closely resembles institutional equity markets — where a prime broker holds assets, an exchange provides price discovery and matching, and a CCP manages settlement risk — rather than the integrated exchange model that has characterised crypto markets historically.

If ClearLoop’s adoption becomes sufficiently widespread, the systemic risk of a large crypto exchange failure changes character: from a catastrophic event that destroys institutional principal to a more manageable event that disrupts trading access and creates settlement friction, but does not destroy client assets held in custody. This is a fundamentally healthier market structure.

The FTX collapse was, from one perspective, the most effective marketing event in Copper’s history — not because of anything Copper did, but because it demonstrated with brutal clarity exactly the risk that ClearLoop is designed to eliminate. The subsequent institutional demand for exchange-risk-managed custody has driven material growth in Copper’s business and validated the founding thesis with empirical force.

Switzerland’s Significance in Copper’s Strategy

Switzerland is not merely a regulatory convenience for Copper. The Swiss institutional digital asset market — characterised by sophisticated family offices, Crypto Valley-domiciled funds, and FINMA-supervised institutional investors — represents exactly the client profile that benefits most from Copper’s integrated custody and ClearLoop offering.

Swiss institutional clients managing digital asset portfolios of CHF 50 million or above cannot prudently hold all assets at exchanges. Their fiduciary obligations require counterparty risk management that ClearLoop provides. The FINMA supervision of Copper’s Swiss entity provides the regulatory assurance that Swiss institutional clients’ own compliance requirements demand.

As Switzerland’s institutional digital asset market continues to mature — with pension fund allocations expected to grow, family office digital asset positions expanding, and Swiss cantonal banks extending crypto services — Copper’s Swiss entity is positioned to deepen its role as the infrastructure layer for the Swiss institutional trading ecosystem.

Related reading: Swiss Crypto Custody Tracker | Crypto Custody Global Comparison | Swiss Exchange Regulatory Tracker

Donovan Vanderbilt is a contributing editor at ZUG TRADING. This article is informational and does not constitute investment or trading advice.