Binance allows customers to custody trading collateral off exchange as market share recovers Binance allows customers to custody trading collateral off exchange as market share recovers
Binance believes that this solution would paves the way for greater adoption amongst institutional investors.
2 min read
Updated: Jan. 30, 2024 at 3:09 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
A Binance representative confirmed in a Jan. 30 email statement sent to CryptoSlate that the platform is now allowing institutional investors to secure their trading collateral through a third-party banking partner.
Binance’s solution, described as a “banking triparty” arrangement, has been under development for the past two years and directly addresses the primary concern of counterparty risk, a significant consideration for institutional investors. This model enables investors to manage risk effectively while optimizing capital efficiency by pledging collateral in traditional assets.
While details about the specific banking partners remain undisclosed, Binance emphasized active engagement with various banking entities and institutional investors expressing interest in the arrangement.
The platform introduced the pilot scheme for this solution last November, allowing collateral held with the banking partner to be in fiat equivalents, such as Treasury Bills.
Before this development, Binance clients were limited to holding their assets on the exchange itself or through its custodial service provider, Ceffu. However, concerns arose following the U.S. Securities and Exchange Commission’s lawsuit against Binance, questioning the exchange’s crypto wallet custody practices and its relationship with Ceffu.
Binance market share recovers.
Binance market share is steadily growing to previous heights after its run-in with several financial regulators across different jurisdictions impacted its operations last year.
Last year, the platform strategically withdrew from Canada, the United Kingdom, and several European nations, including Austria, Cyprus, and the Netherlands, due to regulatory non-compliance issues.
Furthermore, it faced a substantial $4.3 billion settlement with U.S. authorities, leading to a market share dip to 44.5% by the close of the same year.
However, recent findings from Kaiko Research indicate a noteworthy comeback for Binance this year.
Data reveals that Binance’s trading volume has climbed to 49.44% from its previous multi-year low, while 23 other centralized exchanges collectively account for 50.56% of trading activities.
In response to this significant turnaround, Binance CEO Richard Teng expressed his optimism with a succinct “Keep Building” post on social media platform X.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Richard Teng, a veteran in the financial services and regulatory sectors, boasts over three decades of extensive experience.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.