Certain exchange and custody services in connection with trading and holding cryptocurrency tokens and other digital asset tokens (collectively, "crypto") through Interactive Brokers LLC’s (“IBKR”) platform are provided by Zero Hash LLC and Zero Hash Liquidity Services LLC (collectively "Zero Hash"), each of which is a registered money services business with FinCEN and licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services. Zero Hash LLC is also a regulated Money Transmitter that can operate in 51 U.S. jurisdictions.
This means to trade crypto, you must become a client of Zero Hash. When clients request the cryptocurrency trading permission in Client Portal, they agree to permit IBKR to provide their information to Zero Hash in order to apply for an account at Zero Hash in their name, and they are required to sign Zero Hash’ Customer Terms & Conditions. Clients must also sign a supplement to the IBKR Client Agreement which authorizes and instructs IBKR to engage in certain cashiering activities in their IBKR brokerage account to (i) withdraw US dollars from their brokerage account and transfer them to their account at Zero Hash to pay for crypto purchased and (ii) to sweep proceeds of sales of crypto at Zero Hash out of their account at Zero Hash and into their brokerage account at IBKR. Crypto trading permissions are enabled once a supplement to the IBKR Customer Agreement is signed and the IBKR client is approved as a Zero Hash client.
Once enabled, IBKR clients can trade crypto in their Zero Hash account using the IBKR trading platforms. When clients trade crypto through the IBKR platform, although IBKR acts as your cashiering agent, IBKR has no custody or control over the crypto assets you hold in your account at Zero Hash. All crypto transactions occur on the Zero Hash exchange. Zero Hash is your custodian for all crypto assets, and none of the legal protections associated with your securities account at IBKR (such as insurance under the Securities Investor Protection Act) apply to those crypto assets.
By supporting crypto trading through IBKR’s platform in conjunction with Zero Hash, IBKR provides its clients the convenience of centralized cash management and a single user interface that shows both their IBLLC-carried securities & commodities positions and their Zero Hash-carried crypto positions.
To comply with all relevant regulatory requirements and to avoid any client confusion, IBKR keeps the distinction between activities and positions at IBKR and activities and positions with Zero Hash very clear throughout all of the trading platforms. This may include the presentation of symbols indicating an asset is held at Zero Hash, headers, footers, pop-ups, and other such notices.