Binance announced the successful execution of the world’s first custody project arranged by a third-party cryptocurrency bank.
The solution enables institutional investors to place trading collateral, OTC collateral, with third-party banking partners for safekeeping. This is the first in a series of pilot projects launched by Binance. At the same time, Binance is currently the only cryptocurrency exchange that provides such a solution.
This arrangement directly addresses the issue of counterparty risk, which is a top concern for institutional investors today. It replicates a framework commonly seen in traditional financial markets, allowing investors to allocate crypto assets based on their risk tolerance. Collateral held by banking partners can be in the form of fiat equivalents, such as Treasury bills, giving it the added benefit of being a yielding asset.