According to the Financial Times, Binance, the world’s largest cryptocurrency exchange by trading volume, has formed a strategic partnership with Swiss banking institutions to alleviate growing concerns about counterparty risks in the crypto industry.
This follows regulatory fines imposed on Binance by U.S. authorities in 2023. As part of the partnership, Binance allows “traders of larger assets” to store their assets with independent banks, including Switzerland’s Sygnum Bank and Flow Bank, as well as existing custodian Ceffu.
Binance Addresses Counterparty Risk
Previously, Binance customers could hold assets on the exchange or through Ceffu, which U.S. regulators labeled a “mysterious Binance-related entity.” However, through the new partnership, traders now have the opportunity to store their assets in regulated Swiss banks.
The head of an unnamed cryptocurrency trading firm prefers Swiss banks to the Financial Times, saying they offer "potentially greater security" than leaving funds on an exchange.
According to the report, Binance emphasized that it has been developing three-party solutions for banks long before counterparty risk became a prominent issue. The move is part of its ongoing efforts to address industry-wide concerns.
The collapse of rival exchange FTX in 2022 and a recent regulatory crackdown on Binance by U.S. authorities have heightened concerns about the safety of keeping funds on the exchange.
As previously reported, Binance faces a record $4.3 billion fine after pleading guilty to criminal charges related to money laundering and violating international financial sanctions.
The U.S. Securities and Exchange Commission (SEC) also accused Binance of violating multiple securities laws, alleging "an extensive network of deception and conflicts of interest." The exchange, formerly led by Changpeng Zhao (CZ), is currently contesting the accusations.
Protect investor funds?
According to the report, cryptocurrency exchanges such as Binance and Coinbase have traditionally played multiple roles, including trading venues, custodians and lenders, which has raised concerns among regulators.
Different independent companies often provide these services to reduce the risks of mainstream finance. Custody banks play a vital role in the safe custody of client assets. The hybrid functionality of trading platforms has prompted regulators to call for greater separation to protect investor funds.
Binance said the partnership with UBS directly addresses counterparty risk, a major concern for institutional investors in the industry.
Due to the higher interest rate environment, traders can earn around 4% interest by allowing clients to deposit funds with U.S. Treasury custodians, according to the Financial Times.
The report further highlights that the exchange is actively engaging with banking partners and institutional investors who have shown interest in this risk management solution.
Overall, the company’s partnership with UBS represents a step toward addressing counterparty risk issues in the crypto industry. By allowing larger traders to store their assets in Swiss banks, Binance aims to increase the security and oversight of customer funds.
虽然加密行业不断发展，但交易所和成熟金融机构之间的合作预计对于建立信任、确保保护投资者资产和解决监管问题至关重要。 #币安瑞士 #加密货币托管