The Financial Times (FT) reported that Spanish bank BBVA has started to provide off exchange custody for the Binance cryptocurrency exchange. This allows traders to store assets with independent banks rather than at the cryptocurrency exchange directly, reducing counterparty risk and enforcing asset segregation. The FT says the move is to allay fears following the 2022 collapse of the FTX exchange.
One source indicated that BBVA is looking after US Treasuries, which are being used as collateral. The Spanish bank also appears to be safeguarding crypto assets directly.
The FT reported that Binance started to allow off exchange custody early last year through Swiss digital asset bank Sygnum, which also provided the service to crypto derivatives exchange Deribit before its acquisition by Coinbase. Switzerland’s FlowBank was also a third party custody provider, but it was shut down last year by Swiss regulator FINMA.
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