Binance has partnered with BBVA, Spain’s third-largest bank, to provide offline custody solutions for its global customers. This arrangement enables the client to keep their assets under the custody of U.S. Treasuries, not Binance, with BBVA.
This structure mitigates risks by keeping custody away from trading functions, seeking to prevent the type of collapse witnessed with FTX. According to the accord, BBVA retains user assets with Binance taking them as security for trading without actual possession.
This structure protects traders by ensuring their money stays safe even if issues occur with the crypto exchange platform. It comes after Binance agreed to a 2023 fine of $4.3 billion by US regulators for breaking anti-money laundering rules.
Its founder, Changpeng Zhao, also received a four-month jail sentence due to related regulation failures last year. After this, Binance exited the U.S. market and started to provide more transparent and decentralized custody of assets.
Until now, Binance users could keep money only on the exchange or through its partner Ceffu, regarded as too closely connected. To respond to concerns about transparency, Binance subsequently collaborated with Switzerland’s Sygnum and FlowBank for third-party custody.
BBVA expands role in Crypto services for clients
BBVA’s involvement adds credibility to Binance, with many users seeing the bank as a more trusted institution. The Spanish bank has already introduced bitcoin and ether services via its retail users’ mobile app in the past weeks.
It also recommended its individual customers to invest up to 7 percent of portfolios into tokens and crypto assets. BBVA’s partnership with Binance enables it to enhance its presence in crypto without breaching stringent regulation limits.
Traditional banks like BBVA become increasingly friendly to crypto with growing legal clarity by both the US and the EU legislatures. Most traders opt for independent custody after the loss of money during the 2022 collapse of FTX, which stirred worldwide withdrawal tendencies.
This custody arrangement keeps the client capital with a licensed bank but still allows for active cryptocurrency trading. Both Binance and BBVA declined to comment, but sources verify the structure is designed to keep users safe.
With this year’s skyrocketing bitcoin prices and crypto trade volumes, these types of partnerships are a safer option for investors.More investors now prefer standalone custody after the loss of money with the 2022 collapse of the FTX, driving global withdrawal tendencies.
