Binance has recently rolled out a new option for its large traders, allowing them to store their digital assets with independent banks. This change directly responds to their customers’ growing desire for more control over where their assets are kept.
In the past, traders on Binance had only two options for storing their assets: keeping them directly on the exchange or using Ceffu, which was Binance’s only institutional custody partner. However, Binance has now allowed its users to choose autonomous banks for their asset custody. Crypto-friendly banks like Sygnum and FlowBank in Switzerland are among the options available.
This move is quite significant in the crypto world. Typically, roles like trading venue, custodian, and lender are handled by separate entities in traditional finance to reduce risks. But big exchanges like Binance and Coinbase have been playing all these roles, drawing attention and concern from regulatory bodies.
Why This Matters
The importance of this change can’t be understated. Custodian banks are pivotal in the finance world, safeguarding clients’ assets. In the realm of cryptocurrency, where the separation of financial functions isn’t as clear-cut, this new step by Binance challenges the norm and invites regulatory watchfulness. The goal? To maintain the integrity and security of these complex services.
Binance has been developing a banking tri-party solution since last year, which is not an impulsive move. This solution involves a three-way agreement between Binance, its customers and a bank custodian. However, Binance has not disclosed which banks are involved in this agreement.