Binance has introduced the first-ever cryptocurrency Triparty Banking arrangement with an external banking partner. This marks a noteworthy advancement in the crypto exchange domain.
As outlined in a press release on Wednesday, this innovative agreement is designed to empower customers. It provides them with the choice of safeguarding their collateral off the exchange. This is achieved through a collaboration with a third-party banking entity.
Furthermore, addressing long-standing concerns about counterparty risk among institutional investors, Catherine Chen, Binance’s Head of VIP and Institutional Banking emphasized the collaborative effort which involves crypto experts and traditional finance professionals and has been in progress for over a year.
Binance’s Innovative Triparty Banking Deal and Risk Mitigation
The press release elaborated that the collateral entrusted to the banking partner would assume a fiat-equivalent form, such as Treasury Bills, offering the additional advantage of being a yielding asset.
However, Chen emphasized the development of a solution designed to enable institutional clients to optimize their collateral and cryptocurrency investments. It aligns with the trading conduct observed in traditional markets.
Notably, the press release also highlighted ongoing discussions which involve various banking partners and institutional investors who display keen interest in participation.
Furthermore, the primary focus on counterparty risk is identified as a foremost concern for institutional investors. This focus allows investors to customize their crypto-asset allocation based on their risk tolerance. The release asserts that the tripartite arrangement mirrors frameworks commonly seen in traditional financial markets.
Moreover, this groundbreaking agreement from Binance comes amid broader discussions within the crypto industry. These discussions center around the implementation of a more robust regulatory framework.
Legal Woes for FTX Founder, Binance Leadership Transition
In early November, legal repercussions befell Sam Bankman-Fried, the founder of FTX. He was found guilty on seven fraud-related charges, which included misappropriation and mingling of customer funds. This led to a substantial financial deficit.
However, the conversation shifts to Binance’s recent transformation. This change unfolded after the resignation of the former CEO and founder, Changpeng “CZ” Zhao. After pleading guilty to violating federal statutes, Zhao formally resigned as he publicly acknowledged his mistakes in an announcement on X.
Following this development, Richard Teng, previously serving as the Head of Regional Markets for Binance, has taken on the role of CEO.
In his new position, he has made a commitment. He pledges to guide the platform into its next phase. The specific focus is on enhancing security, transparency, compliance, and fostering growth.