Since FTX, Institutions No Longer Want to Keep Crypto on Exchanges

Institutions are accelerating their adoption of crypto, with major players steadily entering the market and expanding their exposure to digital assets. But while participation is rising, the way these institutions engage with the ecosystem has fundamentally changed. The old model, where funds parked large amounts of capital directly on crypto exchanges, is being replaced. In its place is a new architecture where trading and custody are no longer intertwined. “Counterparty risk awareness in crypto comes in cycles, and the recent major cyber-attack has triggered one of the largest waves of exchange derisking since FTX. It is yet another reminder that separating crypto custody from exchange trading is essential for security,” says Dominic Lohberger, Sygnum Chief Product Officer. Proof of Talk is joining us as co-host of the Institutional 100 Awards.The most respected Awards. At a spectacular venue!📍Louvre Palace, Paris🗓️ 2-3 June, 2026The BeInCrypto x @proofoftalk Institutional 100 Awards ceremony will recognize the top institutions building the… pic.twitter.com/UqkoH7ekuw— BeInCrypto (@beincrypto) April 9, 2026 How FTX Broke Institutional Trust in Exchange Custody Before 2022, the dominant strategy was simple. Deposit funds onto an exchange, execute trades, and leave capital there for convenience and speed. Exchanges acted as both trading venues and custodians. That model worked, until it didn’t. The collapse of FTX exposed a critical flaw. Investors were taking on massive, often invisible counterparty risk. FTX operated as an exchange, custodian, lender, and clearinghouse all in one What had been considered operational efficiency was suddenly recognized as a structural vulnerability. Customer assets were not held in verifiable, on-chain, segregated accounts. When the firm filed for bankruptcy, clients discovered their funds had been diverted to Alameda. The damage extended well beyond FTX’s direct users. Galois Capital, a former registered investment adviser, shut...