STS Digital, the regulated digital-asset derivatives firm, has launched what it describes as a first-to-market structured products platform for institutional investors, extending the principal dealer model it has built across crypto options into a broader range of yield enhancement, capital protection and bespoke structuring capabilities.
The platform, which targets banks, institutional investors, family offices, external asset managers and high-net-worth individuals, offers structured products across a subset of the more than 400 digital asset tokens on which STS already provides options liquidity. Solutions include options-based yield enhancement strategies, principal-protected and buffered notes, and fully bespoke structures tailored to specific return objectives.
The launch is accompanied by STS Digital’s first structured products distribution partnership with Kraken, one of the world’s largest crypto exchanges. Earlier this month, Kraken introduced Dual Investment, a product enabling eligible clients to earn fixed returns on Bitcoin or Ether with payouts available in-kind or in USD. The product is powered by STS Digital’s yield enhancement and derivatives infrastructure, delivered via API integration.“This launch marks a significant advancement in expanding our institutional access to sophisticated digital asset investment solutions,” said Jeremy Dominh, Head of Structured Products at STS Digital. “Our trading platform offers an unparalleled breadth of assets, spanning both leading cryptocurrencies and a diverse range of altcoins, enabling institutions to invest with greater flexibility, precision, and strategic control.”
The partnership with Kraken is not arm’s length. Payward, the financial infrastructure platform behind Kraken, was among the investors in STS Digital’s $30 million strategic funding round announced last month, alongside CMT Digital, Strobe Ventures, Arrington Capital, F-Prime (Fidelity) and BitRock Capital. That equity relationship underpins the distribution arrangement: Kraken gains access to structured products capabilities without building its own options desk or taking principal risk, while STS gains a scaled distribution channel for its pricing and execution infrastructure.
“We are pleased to combine our derivatives expertise with Kraken’s distribution,” commented Maxime Seiler, CEO of STS Digital. “Our alignment enables partners to bring options and structured products to their clients with instant access to liquidity, supported by broad token coverage, deep product breadth, and consistent liquidity.”
Platform model: principal dealer as infrastructure
The API-driven model is central to STS Digital’s growth strategy. The firm operates as a principal dealer in crypto options, acting as the counterparty to every transaction and hedging risk on its own book. Exchanges and platforms integrating STS’s API can offer options and structured products to their own clients without running a central limit order book or assuming principal risk themselves. Kraken is the second exchange partner to integrate the API, with a partnership with BitGo also in the process of going live.
“Partnering with STS to bring structured strategies like covered calls to our platform strengthens our growing suite of derivatives solutions and gives clients a new way to generate return that’s distinct from traditional crypto approaches like staking or lending,” said Alexia Theodorou, Director of Derivatives at Kraken.
Proprietary stack and regulatory positioning
The underlying technology is entirely proprietary. STS Digital spent two years in stealth mode building its pricing engine, risk management systems, volatility surfaces and API infrastructure from scratch before going live. The firm’s CTO, Neil Hemming, joined from Elwood, where he was Head of Engineering. The decision to build the full stack in-house was driven by the requirement to price and trade bespoke options with arbitrary strikes and maturities across hundreds of tokens, a capability that off-the-shelf or white-labelled systems could not support at the required scale.
The firm’s regulatory positioning is also distinctive. STS Digital is prudentially regulated in Bermuda under a DABA M licence issued by the Bermuda Monetary Authority, a jurisdiction chosen because its regulatory standards are recognised by tier-one regulators while remaining operationally workable for a principal crypto derivatives business. Bermuda is also the jurisdiction of choice for Coinbase International and Kraken’s own derivatives entities.
Looking ahead, STS Digital has indicated it intends to extend the platform beyond cryptocurrencies to include tokenised equities, commodities and foreign exchange, with a target of Q3 or Q4 2026. This would position the firm as a multi-asset structured products factory on digital rails, capable of constructing cross-asset products – such as a structured note offering blended exposure to tokenised gold and Bitcoin with periodic rebalancing – and distributing them through exchange and platform partners.
The structured products launch represents a further step in the institutionalisation of crypto derivatives infrastructure. As with any principal dealer model, each structured product constitutes a bilateral exposure to STS Digital itself, and institutional counterparties – particularly banks and family offices with internal credit risk frameworks – will naturally look to understand the collateral arrangements, margining and counterparty protections that underpin the platform as adoption scales.
The “first-to-market” positioning is notable. While firms including Galaxy Digital, GSR and QCP Capital have long offered structured products to institutional crypto investors, STS Digital’s distinction may lie in the platform-based, API-distributed model, enabling exchanges and platforms to white-label structured products at scale rather than executing them on a bespoke, relationship-driven basis. If the model gains traction across additional distribution partners, it could establish a new layer of infrastructure in the evolving crypto derivatives landscape.
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