Binance Allows Traders to Use Independent Custodian Banks for Asset Storage
In response to concerns over counterparty risks and regulatory pressure, Binance, the global crypto exchange giant, has announced that select institutional investors and whales can now hold their assets with independent Swiss custodian banks. This move allows traders to have the option of storing their assets with trusted and independently regulated banks like Sygnum Bank and Flow Bank, rather than keeping them solely on the Binance exchange or with affiliated custodian Ceffu.
Why Traders Want Independent Custody Options
Traders have been pushing for independent custody options due to worries about leaving their assets on exchanges after the collapse of FTX and the regulatory crackdown on Binance in the US. Using independent Swiss banks for custody is seen as safer in theory since they have regulatory oversight. However, there are still concerns about residual risk if Binance retains influence over decision making.
Earning Interest on USD Treasuries
The new setup allows traders to earn interest on USD treasuries held at the custodian banks while still trading on the liquid Binance platform. This provides traders with additional flexibility and potential returns on their assets.
Regulatory Concerns over Binance’s Model
Binance’s all-in-one model of acting as an exchange, broker, lender, and custodian has worried regulators who prefer separation of duties to reduce risk. The move towards allowing independent custodian banks is a response to these concerns and aims to address them.
Hot Take: Binance Adapts to Changing Market Dynamics
As traders diversify across platforms for risk management purposes, Binance has recognized the need to adapt its custody offerings. By allowing traders to store their assets with independent custodian banks, Binance is providing more options and flexibility to its users. However, there are still lingering concerns about Binance’s influence over these independent providers. Overall, this move demonstrates Binance’s efforts to address regulatory concerns and cater to the evolving needs of traders in the crypto market.
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