Binance introduces a pioneering three-party agreement with a banking partner, offering a secure solution for institutional investors to manage counterparty risks in the cryptocurrency market.
Binance has successfully executed the world’s first three-way cryptocurrency agreement with a banking partner, although the specific banking partner was not identified.
This important development offers a pioneering crypto solution that reflects traditional financial frameworks, designed specifically to meet the needs of institutional investors.
The tripartite agreement allows institutional investors to store their commercial collateral off-exchange, in the custody of a third-party banking partner. This innovative solution directly addresses the primary concern of counterparty risk, which is prevalent among institutional investors in the cryptocurrency market.
Binance will potentially be a safe haven for collateral trading, making it a familiar and attractive option for institutional investors.
Catherine Chen, Head of VIP and Institutional at Binance, Elaborated about the development, explaining that the team, made up of both crypto natives and traditional finance professionals, had been exploring this three-party banking deal for over a year. The goal was to develop a solution that would allow institutional clients to optimize their investments in collateral and cryptocurrencies, modeled after the business practices of traditional markets. Collateral held with the banking partner may include fiduciary equivalents, such as Treasury bills, which adds the benefit of building assets.
This agreement marks the first in a series of pilot projects initiated by Binance. The leading exchange is taking strategic steps to improve the trust of its community and the industry following its recent criminal charges and settlement with the US Department of Justice.
