In an innovative triparty arrangement with a banking partner, Binance provides institutional investors a safe way to handle counterparty risks in cryptocurrency.
With a financial partner, Binance has effectively carried out the first-ever cryptocurrency triparty agreement, while the name of the banking partner remained undisclosed.
This important breakthrough provides a first-in-crypto solution that mimics conventional financial frameworks and is especially made to meet institutional investors’ expectations.
Institutional investors are permitted by the triparty agreement to store their trading collateral off-exchange in the safekeeping of a third-party banking partner. The main issue that institutional investors in the Bitcoin industry have, counterparty risk, is directly addressed by this creative solution.
Institutional investors will likely find Binance a familiar and appealing alternative as it may prove to be a secure shelter for trade collateral.
The team, which included experts in traditional finance as well as those with experience in cryptocurrency, had been investigating this banking triparty agreement for more than a year, according to Catherine Chen, Head of VIP and Institutional at Binance, who provided further details on the development.
The goal was to create a system that, by closely imitating the trading procedures of traditional markets, would enable institutional clients to maximize their investments in bitcoin and collateral.
The benefit of yielding assets can be added by using fiat equivalents like Treasury Bills as collateral kept with the banking partner. With this agreement, Binance launched the first of several test projects.
After recently being charged with a crime and reaching a deal with the US Department of Justice, the major exchange is taking deliberate steps to rebuild industry and community trust.
