The leading cryptocurrency exchange, Binance, has successfully implemented the world’s first cryptocurrency triparty arrangement with a third-party banking partner.
This innovative solution enables institutional investors to securely store trading collateral off-exchange with a trusted banking partner, addressing the critical concern of counterparty risk.
Binance stands as the sole cryptocurrency exchange currently offering such a groundbreaking feature. The arrangement mirrors traditional financial market frameworks, allowing investors to adjust their crypto-asset allocation based on risk tolerance.
With this solution, Binance is able to help its institutional investors tackle their primary concern of counterparty risks.
Catherine Chen, Head of VIP and Institutional at Binance, stated, “We’ve developed a solution that ensures our institutional clients can optimize their collateral and cryptocurrency investments, modeled after the traditional markets’ trading conduct. We are in close discussions with an array of banking partners and institutional investors who have also expressed strong interest in participating.”
The collateral held with the banking partner can be in the form of fiat equivalents like Treasury Bills, offering the additional benefit of being a yielding asset.
Binance’s pioneering triparty arrangement marks a significant stride in mitigating counterparty risk for institutional investors, bridging the gap between crypto and traditional finance with a secure off-exchange collateral solution.
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