Rails has announced the introduction of Institutional-Grade Vaults on the Stellar network aimed at enhancing the integration of crypto perpetuals for institutional clients including brokerages and fintechs. The firm is targeting options trading to commence in Q2 2026.

Satraj Bambra, the CEO of Rails, elaborated on the concept, emphasizing the distinction between matching and monetary custody. He stated, “The critical difference is custody and verifiability.” Rails operates a centralized matching engine, while assets from clients will remain in audited smart contract vaults on Stellar, with economic activities such as profit and loss updates committed on-chain every 30 seconds, allowing institutions to reconcile against their records.

Mitigating Counterparty Risks

The design claims of these vaults propose to diminish counterparty and operational risks by isolating client collateral from market-making and operational funds. Bambra pointed to past exchange failures as a critical reason for this structure, stating, “If they fail, you become an unsecured creditor in bankruptcy. This is exactly what happened to FTX customers.”

He urged the importance of separating execution from custody and reaffirmed that user funds are secured by on-chain contracts rather than held directly by Rails, specifying Stellar’s network suitability due to its established credibility within the banking sector.

With more than $3.4 billion in trading volume already processed, Rails maintains its registration with the Cayman Islands Monetary Authority and is in the process of registering with the U.S. National Futures Association.

A Surge in Crypto Derivatives

According to a report from CoinGlass, derivatives have emerged as a significant method for price discovery, recording $85.7 trillion in trading volume last year with an average daily turnover of approximately $264.5 billion. Nonetheless, the report cautions that increased complexity in the trading strategies has heightened systemic risks within the sector.