Editor: Wu Shuo Blockchain

In this interview with Wu Shuo, Deribit CEO Luuk Strijers shared the company's journey from a niche platform focused on crypto options to a leader in institutional trading. Deribit is currently the largest cryptocurrency options exchange, with BTC options trading accounting for over 80% of the total market volume and ETH options trading accounting for over 90%.

Luuk pointed out that Deribit's early entry, consistent product focus, and infrastructure advantages were key to its success over multi-product competitors like Binance. He also elaborated on the reasons behind Coinbase's acquisition, including strategic alignment and synergies from global expansion. He also addressed challenges regarding compliance processes, particularly Know Your Customer (KYC), and emphasized that the platform will remain focused on serving professional institutional investors.

In addition, Luuk also discussed his views on DeFi options platforms, future market expansion plans, product evolution directions (including the launch of smaller contract units and longer-term options products), and Deribit's role and positioning as a core component of Coinbase's international options business.

Luuk's personal background and the opportunity to enter the crypto industry

Maodi: Good afternoon, Luuk. Thank you for taking the time to speak with us. We've been following Deribit's development for some time, and we're very excited to have a deeper conversation with you today. First, could you please briefly introduce your personal background and career experience? What was your career path before joining Deribit? What brought you to the crypto industry?

Luuk: Thank you for your invitation. First, let me talk about why I got into the crypto industry. I joined Deribit in 2019 as Chief Commercial Officer. Before that, I worked at the Singapore Stock Exchange for about five years. Before that, I worked at a Dutch options exchange for five or six years. My earliest career experience was in the capital markets in Amsterdam, where I also worked for about five years. That was my first job in 2004. It's been 21 years now, and I've spent about 15 to 16 of those years working in exchanges.

I've been following traditional exchanges, options, and futures trading for nearly fifteen years. At the start of the crypto boom, around 2016-2017, I was also doing some spot trading. I realized the enormous opportunity and potential in this space, and I was eager to explore further. This drive ultimately led me to Deribit. I officially joined in September 2019, and I've been CEO for almost two years now.

Why Deribit Leads Other Large Exchanges in the Options Market

Maodi: Deribit is a unique exchange. Unlike many other platforms, it wasn't founded by a Chinese team. In your opinion, why has Deribit been able to survive and succeed in this space? Many exchanges, like Binance, Bybit, and OKX, have attempted to launch options products but have never been able to gain market share from Deribit. I find this fascinating: they've tried everything, but haven't managed to break through in crypto options. Why do you think this is?

Luuk: I think there are several reasons. We launched in 2016, which was very early. At the time, virtually no one was interested in crypto options. Bitcoin's volatility was much higher than it is today, so the premiums for options were very high. There were no dedicated options market makers, so the order book quality was relatively poor.

But over time, the market gradually grew. By 2018, we saw the entry of professional market makers. Some teams had spun out from traditional large options market makers to establish trading teams specifically for crypto options. With their entry, bid-ask spreads narrowed, order book depth improved, and we gradually established a strong reputation. The first hedge funds and small and medium-sized institutions began to enter the market, and we gradually grew. This "first-mover advantage" continues to be of great benefit to us today. Many users choose Deribit because we were among the first serious players focused on options, and we remain deeply committed to this field.

Everything we do revolves around options. All our resources—our team, our infrastructure—are completely focused on options trading. For example, we don't use cloud services, but deploy our own dedicated hardware, which allows us to execute trades much faster. We also offer features like multicast, an ultra-low-latency binary data streaming service that no other platform can currently offer. We also have market-making protection mechanisms and a host of other features that others haven't developed because they don't need them—their product scope is too broad.

You can think of those big platforms as "crypto supermarkets". They do everything: spot, contracts, tokens, NFTs... Product managers are competing for resources every day: developing spot today, developing perpetual contracts tomorrow, and occasionally options.

For us, it's always about options. Whether it's today, tomorrow, or the day after tomorrow, we always focus only on options.

This focused mindset gives us an advantage and enables us to create a high-quality product. We do everything we can to ensure the quality of this product, and that's what makes us unique. Of course, I'm not saying other platforms haven't done a good job; some have indeed become very large, but we've deliberately chosen a vertical approach. We've abandoned some businesses, such as not expanding into the spot market, but we've achieved extreme excellence in options.

Product depth, liquidity, or institutional trust? What drives Deribit's market leadership?

Maodi: Do you think Deribit's leading position in the crypto options field comes more from the depth of its products, market liquidity, or the trust of institutional and professional traders?

Luuk: As I mentioned earlier, our core advantage comes from our focus on building high-quality products. This includes bringing in top-tier market makers, designing effective incentive mechanisms, ensuring sufficient market liquidity, and providing features like market-making protection. We constantly strive to compress bid-ask spreads and maintain the depth and quality of our order book.

But we go far beyond trading. We also have significant advantages in compliance and operations. We are regulated in multiple jurisdictions, and our platform architecture is specifically designed for institutional users. For example, we hold SOC 2 Type II certification, signifying that our operational security systems have been audited. We also hold ISO and other certifications, meeting compliance standards across multiple industries. I believe many of the other exchanges you mentioned have not undergone financial audits, but we have been audited for five consecutive years.

These quality indicators set us apart from the competition. Especially after the FTX debacle, the market's focus on quality has never been more crucial. Investors are truly comparing platforms. If you're going to put $100 million in assets on a platform, you need to ensure it's safe, reliable, and professionally run. This is why so many people choose us.

It's true that we may have lost some market share with retail users or certain simpler products. However, our growth on the institutional side has been significant. Currently, approximately 85% of our trading volume comes from institutional investors, and I believe this proportion will continue to maintain. This is because we offer a highly specialized product that attracts truly knowledgeable and professional users.

If you come from traditional finance and want to start an asset management firm, brokerage, or other crypto-focused financial business, the things you're most familiar with and most eager to trade are still the ones you've been doing for decades—options and futures. You're probably asking, "Who's the best at this?" The answer is us. Institutional clients seek quality and liquidity, and that's exactly what we excel at.

Acquired by Coinbase: Why Deribit chose to sell and future collaborative development

Maodi: We know that Coinbase acquired Deribit this year. Besides Coinbase, were there other potential buyers? I've heard that Binance, Bybit, and GSR have also expressed interest. Can you share more information? What led to Deribit's decision? What were the core motivations? Why didn't they choose to remain independent? From a strategic perspective, what changes should Deribit users expect after the merger with Coinbase?

Luuk: This is a multifaceted question. Let me start from the beginning. Our founders initially wanted to cash out some of their shares, so we brought in an investment bank, Deloitte, and other advisors to help us facilitate this process.

However, over time, market conditions changed, partly due to political factors like Trump's election. As a result, our initial plan to sell only a portion of our shares gradually shifted to interest in selling the entire company. We do have several potential buyers, including some you mentioned. I can't confirm their identities because we're under a confidentiality agreement, but we can say that other options exist.

So why did we ultimately choose Coinbase? First, Coinbase is a publicly traded company, which makes the transaction process much simpler and more transparent. They can pay with stock that has a clear present value — not a vague future promise, but real liquidity that can be converted into cash now.

But perhaps more importantly, we shared a common philosophy. Coinbase itself had an excellent product suite and dominated the spot trading market. Their approach to product building was driven by quality—no corner-cutting, compliance-first, and financially sound. They wanted to expand globally, and so did we.

Deribit's product is strong, but it's a niche offering. We're not a one-stop shop. Coinbase, on the other hand, offers a more comprehensive product line. By combining the two, we can offer a complete product architecture that can challenge leading industry players in both quality and breadth. At the same time, we can also begin serving previously unreachable user groups, such as the retail market.

So, when you combine Coinbase's brand, trust, compliance credentials, and financial strength with Deribit's expertise in options, you get a very powerful combination. This was the main reason we ultimately chose Coinbase — although financial factors were also a significant factor.

Will KYC become more complicated after the Coinbase acquisition? How does Deribit respond to user compliance complaints?

Maodi: This next question might be a bit tricky. We've seen quite a few users complain that Deribit's KYC process is too complicated, even painful. How do you respond to these criticisms? Will KYC and compliance become more stringent after the Coinbase acquisition?

Luuk: First, I want to apologize to all our users—compliance is a truly terrible process. We've really struggled to make it a pleasant experience. While we strive to make it as smooth and automated as possible, the reality is that regulatory standards around the world are constantly increasing and will only become more stringent in the future.

The challenge lies in how platforms comply with these rules. For example, enhanced due diligence on source of funds has become mandatory. We must require users to provide various documents, including proof of source of funds and proof of residency. There are also language barriers. This is particularly challenging for Chinese users, as many government bills don't include addresses, and many bills are paid through platforms like WeChat, which is different from global practices. Other regions often verify addresses through bank statements, which is less common in China. So, while this is a global issue, China does face some unique challenges.

So, will the merger with Coinbase change anything? Not much, really. Coinbase follows the same rules as we do, and all regulated platforms must follow them. The more global a platform is, the more complex its compliance becomes. Coinbase is a global company itself, so the compliance challenges we face are the same.

Coinbase used to receive more user complaints than we did, so they formed a dedicated task force to address these issues. I don't have exact statistics, but I understand they've eliminated about 90% of the backlog, and the process has become much smoother. Wait times have gone from a week to maybe an hour. I can't give you exact numbers, but the general trend is right.

So, yes, the process will still be frustrating. But at the same time, we'll be responding to user questions more quickly. We'll do our best to streamline the process and reduce unnecessary friction. Of course, there will still be some roadblocks, but as long as you contact us or Coinbase via email, Telegram, Twitter, or other common channels, we'll follow up and resolve the issues promptly.

Users also need to understand that regulatory standards are only going to get stricter, and for good reason. If we want blockchain and cryptocurrency to truly become globally accepted payment systems, we must ensure that every transaction is compliant—whether it's from a Chinese user transferring funds to Europe or vice versa. To do this, VASPs (virtual asset service providers) like us must verify user identity, the source of funds, and the destination of the transfer, ensuring that the entire transaction path is documented.

It's certainly operationally cumbersome, but as more and more VASPs—hundreds of them worldwide—adopt the same standards, it will become much smoother. This will make the process much faster when we need to verify user identity or transaction information with another platform. The real problem comes when the platform doesn't respond, forcing us to manually investigate, which takes a lot of time.

Will Chinese or Hong Kong users be banned after the merger with Coinbase?

Maodi: After the merger with Coinbase, will you ban users from certain countries or regions, such as mainland China or Hong Kong? How will you balance regulatory enforcement, transaction speed, and user experience?

Luuk: That's a good question. We won't be banning more regions. We will only maintain the current list of banned countries, which is the "standard banned country list" that many exchanges around the world follow. Mainland China and Hong Kong will not be banned.

Will decentralized platforms challenge the status of centralized exchanges?

Maodi: We've recently seen strong growth from some on-chain futures platforms, such as Hyperliquid. What are your thoughts on this trend? Do you think decentralized options platforms could challenge the dominance of centralized exchanges like Deribit in the future?

Luuk: The answer is "yes and no." I think Hyperliquid and similar platforms have done an impressive job in terms of user interface, trading experience, and liquidity. The problem is, these platforms might serve 10,000 users today, then tomorrow another platform offers an airdrop, and those users migrate. And then the day after that, another new platform. This constant migration leads to extremely low user loyalty and makes institutional adoption very difficult.

For an institution to begin trading on a platform, comprehensive KYC and due diligence must be conducted. If users frequently hop between platforms, the institution simply cannot afford the costs and processes of repeated onboarding. This is a major reason why institutions are reluctant to delve into DeFi.

The second, and perhaps most important, reason is the lack of KYC. If you don't know who your counterparty is, you can't comply with regulations in today's increasingly stringent global regulatory environment. Large institutions simply can't afford such risks.

So does DeFi have a future? Absolutely. It's a truly remarkable concept that will persist and succeed in some form. But will it be widely adopted by institutions? In its current form, I don't think so. However, I don't think DeFi will disappear; it will continue to evolve, with new projects emerging. I also sincerely wish Hyperliquid and similar platforms the best; they're doing a truly great job.

The bigger question is: Will users remain loyal to a particular platform? Will standardized models and improved KYC processes emerge in the future? Perhaps, but not yet.

Does DeFi pose a threat to centralized exchanges? To some extent, yes. This is because many traders active in DeFi could have traded on centralized platforms like Deribit and Binance. We might be unable to serve them due to regulatory restrictions, product mismatches, or simply prefer what DeFi offers, such as liquidity or certain features.

The reality is likely a mix of both. Yes, we've lost some market share to DeFi, but that's not a bad thing. It's part of the natural evolution of the market. These platforms are doing meaningful things, but they serve a completely different user base. Our institutional clients won't be moving to DeFi anytime soon.

So I don’t think there will only be DeFi or only CeFi in the future. The two will continue to coexist and grow together.

Strategic Focus: Deribit's Development Path After Merging with Coinbase

Maodi: Looking ahead, what is Deribit's next strategic focus? Will you continue to focus on options trading within centralized exchanges, or do you plan to innovate more broadly? Will Deribit be fully integrated into Coinbase, or will it maintain a certain degree of independence?

Luuk: It will be both. We will become the international arm of Coinbase. Coinbase's goal is to expand globally, and we'll be part of their toolkit—or more accurately, our toolkit now, since we've essentially become a platform. While we're still operationally independent, that will change over time.

We're gradually being integrated into the broader Coinbase organization—but not the US part. You need to think of Coinbase as having both US and non-US parts, and we'll be representing the non-US part. While we may enter the US market in the future, for now we're positioned as the international arm of Coinbase.

This means we will remain focused on options, but will also expand into more products. We are expanding our product line and plan to integrate it with Coinbase's existing products to provide a complete and comprehensive trading product portfolio.

In practical terms, we will introduce users to Coinbase's highly liquid spot markets. Our own spot market is currently very small, so integrating Coinbase's spot liquidity will be a significant improvement. In exchange, we will also provide Coinbase with our advantages in options liquidity and technical infrastructure.

These integrations are being planned — literally on the whiteboard right now. The exact timeline hasn’t been determined yet, but our goal is to roll them out over the next year.

The role of Asian markets in Deribit's future growth

Maodi: Do you think Asia, especially Hong Kong or Singapore, will play a more important role in Deribit's expansion?

Luuk: I think Asia is a very promising market for cryptocurrencies. Not only are there retail investors, but also many family offices and hedge funds showing strong interest. Overall, Asia seems to have a higher risk appetite for investing and trading high-risk assets than the rest of the world. So yes, I do think there are more opportunities in Asia.

However, we also have to look at this from a compliance and licensing perspective. We need to clarify what we can and cannot do in each region, where we can establish operations, and where we are restricted. We are currently evaluating how best to address these challenges.

Team Size and Corporate Culture: Deribit vs. Coinbase

Maodi: What is the work culture like at Deribit? How many employees do you have currently?

Luuk: We currently have about 175 employees. I'm not sure about the exact number of Coinbase employees, but after the merger, we have about 4,000 employees. So, Deribit accounts for 175 of those 4,000.

Most of Coinbase's employees are in the US, but they also have teams in Singapore, India, and London, covering both coasts. Deribit is a much smaller team, and we have a relatively large office in Amsterdam that primarily handles technical work, including development, servers, systems, and security.

We will continue to maintain Amsterdam as an important technology hub, but our presence will be much smaller relative to Coinbase's presence in the U.S. We will collaborate where appropriate while maintaining independence where necessary.

The biggest challenge as a CEO and Deribit's core competitiveness

Maodi: As CEO, what is the biggest challenge you personally face in leading Deribit? If you were asked to summarize Deribit's core competitive advantage in one sentence, what would you say?

Luuk: I joined Deribit in 2019, and the biggest challenge over the years has been managing various crises. We've experienced some technical issues, most notably the bankruptcy of Three Arrows Capital (3AC), a shareholder. This created numerous complexities—financial, legal, regulatory, and operational. We had to navigate legal proceedings, which put immense pressure on the team. It's been a bumpy road, so to speak.

But we learned from it. I think we were too lenient with our clients early on, extending credit beyond what was necessary. It was a painful but valuable lesson. We became stronger as a result, and our internal policies changed, raising our overall standards. You could say that without those challenges, we probably wouldn't have the operational discipline we have today—the annual audits, the various certifications, the compliance systems, and so on.

So, although we have experienced many twists and turns, these "stress tests" have made us more mature.

Deribit's strength comes not only from our products but also from how we treat our customers. Of course, we're not perfect and have had our share of technical issues. But we always address any issues and compensate our customers, and we've never let our users suffer losses due to our internal issues.

If I were to summarize, I would say that our strength lies in the combination of high-quality products and a trustworthy, dedicated team that always maintains good relationships with our clients. This is the core value of Deribit.

Looking ahead, our products may continue to evolve, but our approach to service will not change — we will continue to provide a high-quality product experience and always put users first.

Additional Q&A session

Does Deribit have a strategy to address market share challenges?

Luuk: First of all, we've hit all-time highs in recent months, the best months since Deribit's founding. If you look at 2024 and 2025, we'll be breaking record after record. So IBIT's growth is actually a good thing. They're targeting US retail investors in crypto options trading, which is exactly what we're currently unable to offer. So we sincerely wish them the best, as together we're driving the industry forward, expanding market demand, and making options products more accessible. They're truly doing an excellent job of serving a previously underserved market.

There were indeed a lot of people who wanted to trade, but we couldn't accommodate them at the time. Now they finally have the opportunity, which is good. But this didn't happen at the expense of our market share — our own business continues to reach new highs.

So our current market share remains solid. We still control approximately 75% to 80% of open options interest. Yes, there are many competitors in the market—Binance, OKX, CME, etc.—but we are still the undisputed number one.

This is actually a comparison between different products. For example, ETFs are dollar-based derivatives, while our products are denominated in Bitcoin. So, while they are in the same general category, they are not exactly the same thing.

There are currently two mainstream options in the market: the offshore market we serve, and markets like IBIT that cater to local users. The simultaneous growth of these two markets indicates that opportunities are expanding for the entire industry. Bitcoin is reaching new highs, and I believe it will continue to rise. The market is expanding, demand is growing, and naturally, more participants are needed. In the past, American users were blocked, but now they are returning.

So their success is good for us. If they do well, we benefit. We share many common market makers, and pricing is generally similar. You can trade on IBIT and hedge on Deribit, or vice versa. This creates arbitrage opportunities and new trading strategies, attracting more new participants to the ecosystem.

While the Bloomberg article suggests this is cannibalizing our market share, that's not the case. I actually think it's actually helping us. If IBIT continues to expand, I'd be very happy because their growth will drive our growth as well. Conversely, if they suddenly collapse and lose half their market share, that would be a negative for us as well. Therefore, their success is actually good for the entire ecosystem.

Does Deribit plan to list more traditional assets such as gold, silver and other commodity derivatives?

Luuk: We actually tried to list gold, but later pulled it. We were online for about a year, and during that time the market was still at a high, but we still couldn't generate active demand. So, for now, we believe the biggest opportunity lies in digital assets.

We already support SOL and are planning to list more crypto-native assets. If we compare us to traditional exchanges, we see a similar hierarchical structure: a first-tier blue-chip index followed by a number of secondary products. For us, Bitcoin and Ethereum are the first-tier products, but there are many other tokens worth trading. Initially, we may need to implement incentives to improve liquidity, such as offering some incentives for the first six months, and then observe market feedback.

If the market responds well, we can even launch index products - such as a basket of index products covering the top five, top ten, or top twenty crypto assets, allowing users to gain broader market exposure at one time.

But the core question is: should we introduce traditional market products (such as stocks, gold, and commodities) into the crypto world? Or should we continue to focus on building the best crypto-native products? Traditional financial institutions are adding crypto assets to their product offerings, but do we also need to incorporate their assets in the reverse direction? This question deserves careful consideration.

At least so far, our first attempt at listing gold hasn't yielded ideal results. You could argue that in the future, we might try listing stock options like Tesla, allowing users to trade these assets using BTC or ETH as collateral, but this remains uncertain. Furthermore, traditional markets are closed two days a week, which can limit liquidity on weekends, presenting another significant challenge we need to consider.

That being said, we are indeed exploring new products. For example, we recently launched linear contracts for BTC and ETH. Previously, we only offered inverse contracts—products denominated in BTC or ETH. Now, we also offer USD-denominated options for easier pricing and settlement.

More importantly, these new products can unlock additional customer benefits. Currently, users holding these positions can earn an annualized return of around 3.85%, which is very attractive and has inspired some new trading strategies.

Future plans? We hope to have both — more crypto assets and more types of product innovation.

As Bitcoin prices rise, is Deribit considering lowering the minimum transaction size for its contracts to improve user accessibility?

Luuk: You're absolutely right. This is also the original intention of launching linear contracts with smaller contract units. Yes, we are now considering whether to make similar adjustments to inverse contracts.

Does Deribit have plans to launch long-term options (LEAPs) with maturities exceeding one year?

Luuk: We do occasionally receive inquiries of this nature. But if you look at actual trading volume and liquidity, it's very concentrated in the short term—primarily within the current month and the next quarter. Institutions sometimes use six-month maturities in structured products, but even one-year options are a very small portion of overall trading volume. Two-year options are even more niche.

So I don't think we will offer it as a regular order-based product. However, we are considering offering it through an RFQ (Request-for-Quote) mechanism.

This way, market makers don't need to quote prices for this period around the clock. If you have a trading need, you can send a request for a quote, and we will give you a quote. If you are satisfied with the price, you can trade.

This allows users to gain long-term exposure without relying on 24/7 order book liquidity — most market makers are unwilling to quote a 20% spread for a 2-year term around the clock, especially when there is almost no trading.

So the direction we are currently researching is to create an RFQ trading area, which is somewhat similar to what CME does for some products with poor liquidity or customized products.

Why did Deribit attract Coinbase — was it because of its stronger institutional-oriented culture?

Luuk: Yes, that was indeed one of the main reasons for our collaboration. As I mentioned before, it all comes down to a philosophical alignment. Both Deribit and Coinbase aim to grow in an institutional manner. This means prioritizing quality, establishing a robust client risk management system, stress-testing our systems, ensuring full compliance, and conducting all necessary KYC checks.

Even though we provide traders with flexible trading tools, we still insist on providing services in the most professional and compliant manner.

This philosophy is reflected in every aspect - our hardware architecture, software systems, product design, KOL cooperation strategy and retail-oriented product settings, all of which show that we have a completely different path from retail-centric platforms.

I think Coinbase has a similar mindset. They also have a lot of talent with institutional backgrounds—some from banks and brokerages. I'm not saying we only hire people with these backgrounds, but the combination of traditional finance experience and crypto-native understanding is one of the reasons we've been able to do so well.

Our team is made up of people who have actually done these things and understand how to build and operate financial infrastructure. This is also the key reason why we chose to partner with Coinbase.