In a trailblazing move, Binance, the largest global cryptocurrency exchange, has successfully executed the first-ever cryptocurrency triparty arrangement, collaborating with a third-party banking entity.
This groundbreaking solution offers institutional investors a secure, off-exchange storage option for their trading collateral through a reputed bank.
This novel arrangement launches a series of pilot projects by Binance, making it unique in providing such an offering in the crypto exchange domain.
It replicates a familiar framework from traditional finance, addressing institutional investors’ concerns about counter-party risk.
Investors can now judiciously distribute their crypto assets, balancing risk with the option of holding fiat equivalents like Treasury Bills as collateral, which also serve as yielding assets.
Catherine Chen, Binance’s Head of VIP and Institutional, highlighted the industry’s ongoing institutional concerns regarding counterparty risk. Chen elaborated:
“Institutional investors have consistently expressed apprehension regarding counterparty risk in our industry. Our team, comprising experts from both crypto and traditional finance sectors, has spent over a year devising a banking triparty agreement to address this issue. We’ve crafted a solution allowing institutional clients to efficiently manage their collateral and cryptocurrency investments, inspired by traditional market practices. We are actively engaging with numerous banking partners and institutional investors who have shown keen interest in this initiative.”
As announced on November 30, this pioneering solution is designed to aid institutional clients in optimally managing their collateral and cryptocurrency investments, drawing on traditional market strategies.
In another significant move, Binance has decided to terminate support for its BUSD stablecoin effective December 15th.
This decision follows an August announcement where Binance indicated a phased withdrawal from BUSD after Paxos, the issuer of the stablecoin, was instructed to cease minting in February.
A recent blog post by Binance reassured users that despite the support withdrawal, BUSD will retain its 1:1 U.S. dollar backing. Users can redeem their BUSD holdings until February 2024, as confirmed by Paxos.
Binance has advised users to either withdraw or convert their BUSD assets into other available options on the exchange before the December 15th deadline to ensure a seamless transition.
Users can trade their BUSD for FDUSD, a new stablecoin with no trading fees, or convert it via Binance Convert at a 1:1 rate without any fees.
From December 31st, BUSD withdrawals will be disabled. Remaining BUSD balances (except for users in specific regions) will automatically convert to FDUSD at a 1:1 rate. Post this date, users can still deposit BUSD and manually convert it to FDUSD until further notice.
Additionally, the collateral assets for Binance-Peg BUSD are set to be converted to FDUSD at a 1:1 rate, likely in December 2023. Binance will issue a separate announcement upon completing this conversion process.