Binance allows large traders to store funds outside the exchange
According to the FT, Swiss Sygnum Bank and Flow Bank have already started to cooperate with the exchange
30.01.2024 - 16:07
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What’s new? Crypto exchange Binance has started allowing some large traders to store their assets in independent banks, including Swiss Sygnum Bank and Flow Bank, the FT reports, citing sources. Previously, Binance customers could only store assets in exchange accounts or on the platform of custodian Ceffu, whose website says it is “the only institutional custody partner of the Binance Exchange.”
What else is known? In comments to the FT, a Binance spokesperson said the exchange began developing such a solution almost two years ago, “well before counterparty risk became prominent.” The company declined to list the names of its partner banks, adding that counterparty risk is an industry-wide, not Binance-specific, issue.
Traders began expressing concerns about the need to hold funds on exchanges in the wake of the November 2022 collapse of FTX, which resulted in customer assets being locked up on the platform until the bankruptcy proceedings were completed.
In addition, US regulators have taken an interest in the activities of Binance itself. In June last year, the Securities and Exchange Commission (SEC) accused it of 13 violations of securities laws, the trial is still ongoing.
Binance later settled criminal charges from the DOJ and the Treasury Department for violating sanctions and anti-money laundering laws by agreeing to pay a $4,3 billion fine.
Alaska and Florida regulators ban Binance.US after Zhao admits to violating AML rules
In December, the US federal court found Zhao guilty of violating the Bank Secrecy Act
Speaking to the FT, a Binance spokesperson added that allowing assets to be held in banks would eliminate counterparty risk, which is a major risk for institutional investors, and allow them to scale more efficiently.
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