Binance Introduces Custody Solution for Institutional Traders

Kelvin Munene Murithi
December 1, 2023
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CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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Binance has launched a pilot program that enhances the safety and efficiency of institutional trading. This initiative, announced on November 30, allows institutions to trade cryptocurrencies without the necessity of depositing collateral directly on the exchange.

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A Safer Trading Environment

This program marks a notable shift towards a more secure trading environment. Institutions participating in the program can now store their trading collateral with a third-party bank. This setup mirrors practices in traditional financial markets, catering to the varied risk tolerances of different investors. By allowing the option of keeping collateral in cash or Treasury bonds, institutions gain the opportunity to earn yields while actively trading in the crypto market.

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Binance’s Forward-Thinking Approach

Catherine Chen, a Binance executive, highlighted the company’s commitment to addressing the long-standing concerns of counterparty risk in institutional investing. “Our team, comprising both crypto natives and traditional finance professionals, has dedicated over a year to develop this banking triparty agreement,” Chen stated. She also emphasized ongoing discussions with various banking partners and institutional investors who have shown keen interest in the program.

Counterparty risk, a prevalent concern in finance, refers to the potential default on a contractual obligation by a party involved in a transaction. This risk is compounded in centralized exchanges as traders typically need to deposit their assets on the exchange. Binance’s new pilot program significantly mitigates the risk, providing safety and reassurance for institutional investors.

The move by Binance is not isolated in the industry. On November 28, Deribit, another prominent crypto exchange, partnered with Fireblocks, an MPC wallet provider, to introduce a cryptographic solution enabling traders to perform swaps without exchanging deposits.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.