Binance is considering partnering with banks to reduce counterparty risks for institutional clients, according to a report. There are already some banks that are under consideration.
Crypto exchange Binance is considering partnering with banks to reduce counterparty risks for institutional traders. Sources told Bloomberg that the exchange was discussing a proposal to let institutional clients keep collateral at a bank instead of with Binance. This, in turn, would reduce counterparty risk.
Adding Banks to the Mix
The sources also informed Bloomberg that FlowBank and Bank Frick are two intermediaries that are candidates for the collaboration. Binance has not offered any official statement on the development, and it’s unclear what the timeline for this change is.
Institutional clients have been more concerned about the safety of assets since the collapse of FTX. This change may assuage some of those fears and appeal to the interests of institutional clients.
This is another step by Binance to be more appealing to would-be clients and, more generally, speaks to its efforts to meet compliance standards. The exchange has been taking more steps not to irk lawmakers and protect customers’ funds.
We’re Not Buying a Bank: Changpeng Zhao
Binance has also been in the news for the fact that CEO Changpeng Zhao recently explained why the exchange decided not to buy a bank. The prominent crypto figurehead said that buying a bank doesn’t guarantee regulatory approval in territories outside the bank’s purchase location.
Zhao explained his thought process,
“Banks are not cheap. Banks are very expensive for very little business revenue… The amount of capital required is quite high, and the regulatory approval for buying a bank is the same or more as setting up a new bank, which is very onerous If the banking regulators say, ‘Look, you can’t work with crypto’ then they can take your license away if you do.”
A New Platform for Japanese Customers
Binance is also creating a separate new platform for residents in Japan. The idea is to comply with Japanese regulations completely.
Therefore, the exchange will slowly discontinue services on the global platform. Binance expects to complete the transition entirely for Japanese residents by Nov. 30, 2023. The latter will have to complete KYC registration, which will begin on Aug. 1.
Binance bought the Sakura Exchange BitCoin in November 2022, the latter being a crypto assets service provider. This is expected to reestablish a presence in Japan.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
