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Binance is reportedly examining a proposal to offer its institutional customers the option to securitize their collateral outside the crypto exchange in order to reduce counterparty risk.
The move comes amid growing calls from institutional digital-asset traders for a much-needed change following the dramatic collapse of FTX late last year that resulted in significant losses.
counterparty risk mitigation
according to undisclosed sources familiar with CaseBinance is in discussion with some professional customers about a setup that will enable them to use bank deposits as collateral for margin trading in spot and derivatives.
The names of two possible intermediaries – Swiss-based Flowbank and Liechtenstein-based Bank Frick – have been mentioned, but details remain private pending further discussions. However, both the financial institutions have refrained from commenting on the setup.
Bank Frick, for one, cited banking secrecy laws and declined to comment. Flowbank, on the other hand, said that its license does not cover crypto trading.
The proposed arrangement has not been finalized and is subject to possible modifications. One iteration of the proposal entails locking up customers’ cash in a bank through a three-party agreement, while Binance gives them stablecoins to serve as collateral for margin trading.
Meanwhile, cash held in the bank can be invested in money-market funds so that customers can earn interest and offset the cost of borrowing from a crypto exchange.
Regulatory Action on Binance
The development comes amid regulatory scrutiny of Binance in recent months. FTX’s decline catalyzed action with Binance on the asset class in the midst of a coordinated assault on crypto by United States financial regulators, including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the New York Department of Justice. of Financial Services (NYDFS).
Binance was also delisted this year by Australian banks and fiat providers. The crypto exchange has been in hot water with regulators after the Australian Securities and Investments Commission (ASIC) revoked its derivatives license over allegations of misleading and enabling retail investors in the country.
Binance’s Australia division notified users of suspension of Australian dollar services on May 18 after its domestic payment service provider Zepto was instructed to discontinue support for the exchange. Soon after, traders rushed to cash out their crypto holdings before local banks closed withdrawals. This later resulted in bitcoin trading on the platform at a huge discount.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
[ad_1]
Binance is reportedly examining a proposal to offer its institutional customers the option to securitize their collateral outside the crypto exchange in order to reduce counterparty risk.
The move comes amid growing calls from institutional digital-asset traders for a much-needed change following the dramatic collapse of FTX late last year that resulted in significant losses.
counterparty risk mitigation
according to undisclosed sources familiar with CaseBinance is in discussion with some professional customers about a setup that will enable them to use bank deposits as collateral for margin trading in spot and derivatives.
The names of two possible intermediaries – Swiss-based Flowbank and Liechtenstein-based Bank Frick – have been mentioned, but details remain private pending further discussions. However, both the financial institutions have refrained from commenting on the setup.
Bank Frick, for one, cited banking secrecy laws and declined to comment. Flowbank, on the other hand, said that its license does not cover crypto trading.
The proposed arrangement has not been finalized and is subject to possible modifications. One iteration of the proposal entails locking up customers’ cash in a bank through a three-party agreement, while Binance gives them stablecoins to serve as collateral for margin trading.
Meanwhile, cash held in the bank can be invested in money-market funds so that customers can earn interest and offset the cost of borrowing from a crypto exchange.
Regulatory Action on Binance
The development comes amid regulatory scrutiny of Binance in recent months. FTX’s decline catalyzed action with Binance on the asset class in the midst of a coordinated assault on crypto by United States financial regulators, including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the New York Department of Justice. of Financial Services (NYDFS).
Binance was also delisted this year by Australian banks and fiat providers. The crypto exchange has been in hot water with regulators after the Australian Securities and Investments Commission (ASIC) revoked its derivatives license over allegations of misleading and enabling retail investors in the country.
Binance’s Australia division notified users of suspension of Australian dollar services on May 18 after its domestic payment service provider Zepto was instructed to discontinue support for the exchange. Soon after, traders rushed to cash out their crypto holdings before local banks closed withdrawals. This later resulted in bitcoin trading on the platform at a huge discount.
Binance Free $100 (Exclusive): Use this link to register and get $100 free and 10% off on Binance Futures for the first month. (terms).
PrimeXBT SPECIAL OFFER: Use this link to register and enter the code CRYPTOPOTATO50 to receive up to $7,000 on your deposit.
