‘Microsoft of Blockchains:’ Bitwise Doubles Down on Ethereum’s Fundamentals
Binance Explores Bank Collateral to Enhance Security for Institutional Clients
(Originally posted on : Crypto News – iGaming.org )
Institutional cryptocurrency traders expressed worry following the collapse of FTX last year, underscoring the dangers of using exchanges that serve multiple purposes. The largest cryptocurrency exchange in the world, Binance, has acknowledged the need for improved risk mitigation and is currently thinking about a novel strategy to lower counterparty risk for its institutional clients.
New players only. Welcome Bonus – 100% bonus on your first deposit up to $1000!
Exploring Collateral Alternatives to Safeguard Traders
Binance has started conversations with a few select institutional customers to see if using bank deposits as collateral for spot and derivatives margin trading is a possibility in an effort to provide a more secure trading environment. By maintaining trading collateral only on the exchange, potential risks are intended to be reduced by this creative arrangement.
Potential Partnerships with Trustworthy Banks
According to reports, Binance is in talks with reputable financial institutions to act as middlemen for this collateral service, including FlowBank, based in Switzerland, and Bank Frick, situated in Liechtenstein. These proposed agreements may offer a dependable and controlled framework for client collateral storage, even though the talks are private and subject to change.
New players only. Welcome Bonus – 125% bonus on your first deposit up to $2,500
A Tri-Party Agreement to Ensure Security
Client cash deposits would be safely handled by the bank under the proposed arrangement according to a tri-party contract. Stablecoins would then be made available by Binance as margin trading collateral. This arrangement offers a diversified custody solution that reduces counterparty risk with the goal of adding an extra layer of security for institutional traders.
Potential Benefits for Institutional Traders
Binance intends to offer a safer trading environment by enabling customers to deposit their money in a bank. The company is also looking into ways to use money-market products to earn interest on cash deposits from customers. With this novel strategy, Binance’s clients can borrow crypto assets while addressing worries about the security and yield potential of their funds.
New players only. Welcome Bonus – 350% bonus on your first deposit up to 5BTC
A Shift Towards Secure Custody Solutions
Globally, the demand for secured custody solutions has grown significantly, with regulatory proposals in Asia and Europe placing a strong emphasis on the necessity of protecting client holdings. Notably, reputable financial sector firms including Nasdaq Inc., Bank of New York Mellon Corp., and Fidelity Investments are actively developing or providing institutional investors with crypto custody services.
Embracing Innovation for Enhanced Risk Management
The company’s dedication to meeting the changing needs of institutional traders and enhancing risk management procedures is seen in Binance’s investigation into alternative collateral alternatives. Binance wants to create a more secure and reliable trading ecosystem by working with reputable financial institutions, which will help the crypto industry as a whole mature.
New players only. Welcome Bonus – 100% bonus on your first deposit up to 5BTC