The Mirror service is based on Binance Custody and involves mirroring cold-storage assets through 1:1 collateral held on a Binance account.
Amid the centralized cryptocurrency exchanges (CEX) crisis, crypto exchange Binance is moving to improve its institutional trading services with cold-custody opportunities.
The official launch of Mirror, an off-exchange settlement solution that enables institutional investors to invest and trade via cold custody, was announced by the crypto exchange on January 16.
The recently released Mirror service mirrors cold-storage assets using 1:1 collateral held on an account and is based on Binance Custody, a regulated institutional digital asset custodian.
The increased security provided by the new solution, according to the crypto exchange, allows traders to access the exchange ecosystem without having to directly post collateral to the platform, as stated:
“Their assets remain secure in their segregated cold wallet for as long as their Mirror position remains open on the Binance Exchange, which can be settled at any time.”
A custodian platform with its own cold-storage options, Binance Custody was introduced in 2021 and protects protected assets against external interference, internal theft, physical loss, and damage.
In order to run an institutional-grade digital asset custody solution, Binance Custody obtained cold-wallet insurance in Lithuania in March 2022. Over 60% of the assets safeguarded on Binance Custody are represented by Mirror.
“We built Binance Mirror last year and have been testing it with our institutional users. User feedback has been positive, and we are happy to announce and market it officially now,” a spokesperson for the exchange said.
Whether the crypto exchange intends to offer comparable cold custody services to regular investors is currently unknown. The announcement comes soon after the crypto exchange saw its liquidity drastically decline in late 2022, when the company saw a loss of several billion dollars’ worth of cryptocurrency.
The crisis among CEXs caused by the demise of FTX is largely to blame for the drop in liquidity, as investors flocked to self-custody instead of keeping their assets on centralized platforms.
Changpeng Zhao, CEO of Binance, acknowledged that centralized exchanges may one day be unnecessary in light of the expanding self-custody trend. Ngrave, a manufacturer of hardware wallets in Belgium, received funding from the crypto exchange’s venture capital arm in November.
