Binance, the largest centralized crypto exchange in the world, will allow institutional investors to keep collateral used for leveraged trading off the platform, according to a report by Bloomberg.
The exchange will now let traders post collateral with Binance Custody, a legal entity registered in Lithuania. Binance Custody will hold customer assets offline in cold storage wallets. Once trades settle, assets become accessible to users again.
Binance’s move comes amid investors’ fears sparked by the downfall of FTX. The now-bankrupt exchange, which experienced a bank run in November that ultimately brought it down, misused billions of dollars of customer assets.
Holding assets in cold storage wallets also means they’re virtually immune to on-chain hacks.
Binance’s move to reassure investors that their collateral is safe is also an attempt to keep outflows from the exchange in check.
According to Forbes, Binance has seen over $12 billion leave the exchange in the last 60 days. That’s contrary to the $3 billion figure Binance CEO Changpeng Zhao referred to in December.
On top of that, Binance has recently admitted that its BUSD stablecoin hasn’t always been fully pegged to the U.S. dollar. The stablecoin was undercollateralized by at least $1 billion on three occasions from 2020 to 2021.
Binance is the world’s largest centralized crypto exchange. It’s a welcoming sign that the exchange is attempting to make it safer to trade for institutional investors.
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See original on DailyCoin
Source: Cryptocurrency - investing.com
