Binance introduces a pioneering triparty agreement with a banking partner, offering a secure solution for institutional investors to manage counterparty risks in the crypto market.
Binance has successfully executed the world’s first cryptocurrency triparty arrangement with a banking partner, although the specific banking partner was unidentified.
This significant development offers a first-in-crypto solution that mirrors traditional financial frameworks, specifically designed to cater to the needs of institutional investors.
The triparty agreement allows institutional investors to store their trading collateral off-exchange, under 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 prove a safe haven for trading collateral, making it a familiar and attractive option for institutional investors.
Catherine Chen, Head of VIP and Institutional at Binance, elaborated on the development, explaining that the team, comprising both crypto natives and traditional finance professionals, had been exploring this banking triparty agreement for over a year. The aim was to develop a solution that allows institutional clients to optimize their collateral and cryptocurrency investments, closely modeled after traditional markets’ trading practices. The collateral held with the banking partner can include fiat equivalents such as Treasury Bills, adding the benefit of yielding assets.
This arrangement marks the first in a series of pilot projects initiated by Binance. The leading exchange is making strategic strides to enhance its community and industry trust following its recent criminal charges and settlement with the U.S. DOJ.