STS Digital Raises $30M to Bring Crypto Options to Institutions Amid Market Downturn
Even as retail investors retreat from the cryptocurrency markets following recent price declines, institutional interest remains robust. This dynamic has created a favorable environment for STS Digital, a Bermuda-based financial technology firm specializing in services for institutional crypto traders, which recently secured $30 million in strategic funding.
The funding round was led by CMT Digital, with participation from Payward (the company behind the Kraken cryptocurrency exchange), Strobe Ventures, Arrington Capital, F-Prime (an investment arm of Fidelity), and BitRock Capital. While STS Digital co-founder and CEO Maxime Seiler declined to disclose the company’s valuation, the investment signals confidence in the growing demand for sophisticated crypto trading infrastructure among larger financial players.
STS Digital provides a platform for institutional traders to buy and sell cryptocurrency options, and also functions as a market maker, adding liquidity to the market by taking the opposite side of trades. According to Sam Hallene, an investment partner at CMT Digital, STS Digital’s ability to offer options contracts on over 400 cryptocurrencies sets it apart. “That’s not broadly offered in the market, because it’s a very tough, technical, and risk-management problem to solve, and we feel like they’ve solved that,” Hallene told Fortune.
Options vs. Perpetual Futures
The investment in STS Digital comes at a time when perpetual futures contracts are gaining prominence in the crypto derivatives space. Perpetual futures, often touted for their simplicity and leverage, allow traders to maintain positions indefinitely without expiration dates. Protocols like Hyperliquid and Lighter have emerged as key players in this market. However, STS Digital’s Seiler cautions against the risks associated with perpetual futures, particularly their potential to exacerbate market downturns.
Seiler referenced the market volatility experienced on , when approximately $19 billion in positions were liquidated as cryptocurrency prices plummeted. He argues that the structure of perpetual futures contracts, which allow for high leverage, contributed to the severity of the selloff. “These crypto-native exchanges on perps led and amplified this whole selloff by liquidating clients, driving prices down further by creating more liquidation,” he explained.
In contrast, Seiler believes that options contracts offer greater protection for investors, as they allow traders to specify an expiration date and limit potential losses. This feature is particularly appealing to institutional investors who prioritize risk management.
From Traditional Finance to Crypto
The founding team behind STS Digital brings extensive experience from traditional finance. Seiler began his career at Credit Suisse, while co-founder Gideon Hyams spent nearly two decades at UBS. The two met while working at the trading firm G-20, recognizing a gap in the market for institutional-grade crypto derivatives infrastructure.
Founded in , STS Digital has rapidly grown to a team of nearly 50 employees. The company’s client base includes prominent crypto firms such as the Uniswap Foundation. STS Digital reported tripling its annual revenue from to , demonstrating strong growth despite the broader crypto market’s challenges.
While STS Digital is currently profitable, Seiler declined to disclose specific financial details. The $30 million in new funding will be used to expand the company’s trading capacity, enabling it to execute larger trades for its growing institutional client base, and to further invest in its team.
“We’re getting more and more institutional-size clients onboarding,” said Hyams. “They want to do bigger trades, so we’re scaling the business.”
STS Digital’s success underscores a broader trend of increasing institutional adoption of digital assets, even amidst market volatility. The company’s focus on providing regulated, institutional-grade infrastructure positions it to capitalize on this trend, offering a crucial bridge between traditional finance and the evolving world of cryptocurrency.
The firm’s Bermuda Monetary Authority license is also a key factor in attracting institutional clients, demonstrating a commitment to governance and balance-sheet discipline that is essential for serious counterparties.