I recently read an article from a well-known exchange on cryptocurrency triparty arrangements. This is a big deal because it means that crypto is finally becoming more institutional.
What is a triparty arrangement?
A triparty arrangement is a way for institutional investors to trade cryptocurrencies without having to worry about the risk of their counterparty defaulting. This is because the collateral for the trade is held by a third-party custodian, which is typically a bank.
Binance is the first exchange to offer a triparty arrangement.
Binance has been working to make crypto more institutional. They announce that they have successfully executed the world's first cryptocurrency triparty arrangement with a third-party banking partner.
This is a big deal for a few reasons:
It shows that institutional investors are finally taking crypto seriously.
It makes it easier for institutional investors to trade cryptocurrencies.
It could help to reduce the volatility of the cryptocurrency market.
I think this is a positive development for the crypto market. It shows that crypto is maturing and becoming more institutional. This could lead to more widespread adoption of cryptocurrencies and a more stable market.
However, there are a few things to keep in mind:
Triparty arrangements are still relatively new, so it is not clear how they will work in practice.
Triparty arrangements could add another layer of complexity to the cryptocurrency market.
Triparty arrangements could make it more difficult for individual investors to trade cryptocurrencies.
Despite these concerns, I believe that triparty arrangements are a positive development for the crypto market. They could help to make crypto more institutional and stable, which could lead to more widespread adoption.
I will continue to monitor the development of triparty arrangements and report on any new developments.
Disclaimer: This is not financial advice. Crypto exchanges are risky. Please do your own research.