Binance Launches World’s First Cryptocurrency Tri-Party Arrangement: Details

A new development by Binance (BNB) enables institutional investors to keep trading collateral, off-exchange in the custody of a third-party banking partner.

Binance (BNB) pioneers concept of tri-party banking arrangement in crypto

Binance, the global blockchain ecosystem behind the largest cryptocurrency exchange by trading volume, is pleased to announce it has successfully executed the world’s first cryptocurrency tri-party arrangement with a third party banking partner. 

This arrangement addresses the dangerous issue of counterparty risk in a novel way, making crypto far more accessible for institutional clients. It mirrors a framework common in TradFi, which enables investors to proportion their crypto-asset allocation based on their risk tolerance.

Collateral held with the banking partner can be in the form of fiat equivalent such as Treasury Bills, which have the added benefit of being a yielding asset.

Catherine Chen, Head of VIP and Institutional at Binance, stresses the importance of this release for cryptocurrency adoption in the institutions segment:

Counterparty risk has long been a concern of institutional investors across the industry. Our team, of crypto natives and traditional finance professionals, has been exploring a banking triparty agreement for more than a year to address their concern. We’ve developed a solution that ensures our institutional clients can optimize their collateral and cryptocurrency investments, modeled after the traditional markets' trading conduct. We are in close discussions with an array of banking partners and institutional investors who have also expressed strong interest in participating.

This pilot is the first in a series of experiments with institution-grade instruments in crypto.

Binance's (BNB) new CEO makes things clear

The announcement was made days after the appointment of new CEO Richard Teng. Now he has to struggle with a new phase of legal pressure and pay an unparalelled $4.3 billion fine, as covered by U.Today.

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Binance's (BNB) core native cryptocurrency, Binance Coin (BNB), is trading at $227.4, being 0.2% up in the last 24 hours, per CoinMarketCap data.