Cryptocurrency exchange Binance is reportedly exploring a potential solution to reduce counterparty risk by allowing some of its institutional clients to keep their trading collateral at a bank instead of a bank. on crypto platforms, according to Bloomberg.
The move was in response to a demand from institutional digital asset traders for increased security measures following the collapse of FTX late last year, resulting in significant losses for many traders. pandemic.
According to anonymous sources familiar with the matter, Binance is said to have entered into discussions with select professional clients about a setup that would allow them to use bank deposits as collateral for trading. margin in both the spot market and the derivatives market. Two potential intermediaries for this service, Switzerland-based FlowBank and Liechtenstein-based Frick Bank, have been mentioned, though details of any potential partnerships remain private. .
Under the proposal, customer funds held at the bank would be secured through a tripartite arrangement, while Binance would provide stablecoins as collateral for margin trading. Bank deposits can be invested in money market funds, allowing customers to earn interest and offset the cost of borrowing crypto from Binance.