Coin Edition -
- Binance has begun to allow some traders to keep their assets at independent banks.
- Customers demanded external custody following Binance’s recent regulatory challenges.
- Some Binance customers have reportedly subscribed to Switzerland’s Sygnum Bank and Flow Bank.
Binance, the world’s largest cryptocurrency exchange by volume, has begun to allow some traders to keep their assets at independent banks. According to reports, the recent development arose from customers demanding to hold their assets with an independent custodian. The demand by customers follows the crypto exchange’s recent regulatory challenges.
There are claims of growing unease among Binance customers following its indictment and fine by United States authorities last year. The crypto exchange agreed to pay over $4 billion in settlements with several U.S. enforcement agencies last November. The fine followed years of investigation and uncovering of widespread criminal use of Binance’s platform.
As a result, many Binance customers opted for independent assets custody and have subscribed to banks like Switzerland’s Sygnum Bank and Flow Bank, according to reports. That deviates from Binance’s original arrangement, where customers could only hold their assets on the exchange or through custodian Ceffu.
Binance describes Ceffu as the “only institutional custody partner of the Binance Exchange” on its website. However, U.S. regulators appeared unimpressed with the custodian. They described it as a “mysterious Binance-related entity”.
Although the crypto exchange only recently implemented the independent assets custody, it claimed to have explored the idea for almost two years. However, it identified counterparty risk as an industry concern and not specific to Binance.
Intra-exchange asset custody concerns heightened following the 2022 FTX collapse. Thousands of traders and investors had their money trapped within the platform as the exchange battled with bankruptcy proceedings.
Many users remain uncomfortable with the ongoing regulatory challenges Binance is facing. The U.S. Securities and Exchange Commission (SEC) has charged the crypto exchange over 13 securities law violations. It also accused it of engaging in “an extensive web of deception and conflicts of interest.”
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