Binance Teams Up with BBVA: A New Era of Crypto Custody
In a significant development for the crypto world, Binance has joined forces with BBVA, a leading bank in Spain, to serve as an independent custodian for its customers’ funds. This news was revealed in a Financial Times report, which cited two individuals familiar with the partnership.
Restoring Trust in Centralized Crypto Platforms
The collaboration between Binance and BBVA is seen as an effort to rebuild confidence in centralized crypto investments. This comes after high-profile incidents like the collapse of FTX and Binance’s own regulatory challenges left investors wary.
According to the Financial Times, Binance users will now have the option to store their assets with BBVA, benefiting from the added security of bank-backed collateral. Additionally, Binance has allied with Switzerland’s Sygnum and FlowBank for similar custodial services.
Bridging Traditional and Crypto Finance
As traditional finance institutions step up to offer regulated custody solutions, Binance’s strategy may serve as a bridge for institutional investors to enter the crypto space, as noted by the FT.
The sources further disclosed that Binance’s arrangement with BBVA involves holding customer funds in US Treasurys at the bank. Binance then uses these assets as margin on its platform, which helps minimize counterparty risk.
While Cointelegraph reached out to Binance for confirmation on the BBVA partnership, the exchange acknowledged the inquiry but had not elaborated further at the time of publication.
Ensuring Continued Access to Funds
The FT report highlighted that Binance has been selective in partnering with banks for independent custody, with BBVA standing out due to its strong brand recognition, offering a sense of security and trust for customers.
In another move to simplify financial transactions, Binance has recently launched a service allowing European users to convert crypto to fiat and withdraw directly to their Mastercard accounts, with nearly instant availability. This initiative aims to ease the off-ramping process for users in the European Economic Area (EEA) and the UK.
Prior to these banking partnerships, Binance users had to rely solely on the exchange for storing their crypto assets. By involving reputable banks, Binance adds an extra layer of safety for user funds.
Reflecting on past events, the downfall of the FTX exchange in 2022 left many customers unable to access their funds, intensifying financial strain and inviting greater regulatory oversight. Notably, FTX had frozen around $175 million of Genesis Trading’s investments.
WazirX’s Troubling Situation
Investor anxiety resurfaced when Indian crypto exchange WazirX, previously linked with Binance, halted withdrawals for its 16 million users after a significant security breach.
WazirX sought to involve Binance in compensating the losses, but Binance distanced itself, stating:
“Their [WazirX’s] attempts to shift responsibility is a disappointing deflection tactic, but it should not distract anyone from the glaring issue to be addressed here: the need for the WazirX team to be held accountable for user funds lost under their management.”
