Binance, the largest cryptocurrency exchange after volume, traded, enrolled Spain’s third largest bank, BBVA, to provide custody services when it appears to improve the protection of customers by isolating their assets against any disruption that may occur on the trading platform, the Financial Times reported.
The detention arrangement separates trading activities from the funds that support the transactions with parking client assets in US Treasury that BBVA possesses. Binance then accepts the treasuries as a margin for trade, FT said and quoted people who are familiar with the process. If Binance were to fail, the funds would remain safe in the Treasury under BBVA’s control.
The trade reconciles the exchange from its previous model to keep user funds internally. The shift follows the mounting pressure on crypto exchanges to isolate custody of trade, especially after FTX’s collapse in 2022, which left users’ funds frozen and crushed confidence across the market. Other measurements adopted include proof-of-reserves, a cryptographic method of proving customers’ funds are in their wallets.
Binance, which paid a penalty of $ 4.3 billion last year to US regulators for anti-laundering money laundering, has since enabled clients to use third-party custodians, including sick num and flow bank.
BBVA has moved deeper into crypto. Just this year, it rolled crypto trading and custody through its mobile app and advised private clients to allocate up to 7% of portfolios to Bitcoin
and ether (Eth).
