Binance Pilots Banking Triparty Agreement to Help Institutional Investors to Manage Counterparty Exposure
This first-in-crypto solution replicates traditional finance framework enabling institutions to fulfill risk management obligations by pledging fiat or fiat equivalent trading collateral with banking custodians
DUBAI, UAE, Nov. 30, 2023 /PRNewswire/ -- 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 triparty arrangement with a third party banking partner.
This solution enables institutional investors to keep trading collateral, off-exchange in the custody of a third party banking partner. This is the first in a series of pilot projects initiated by Binance, which is currently the only cryptocurrency exchange offering such a solution.
This arrangement directly tackles the issue of counterparty risk, the primary concern for institutional investors today. It replicates a framework common in traditional financial markets, 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 has the added benefit of being a yielding asset.
Catherine Chen, Head of VIP and Institutional at Binance, said, "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."
