Cryptocurrency exchange Binance considers a proposal to allow some institutional clients to hold collateral with a bank rather than a platform, which could help mitigate counterparty risk.
People familiar with the matter reported that Binance has discussed the matter with some of its professional clients. This offer would allow them to use bank deposits as collateral for spot and futures trading. Also, individuals who asked not to be identified said that Swiss FlowBank and Liechtenstein Bank Frick were mentioned as potential intermediaries for this service.
In addition, some details of the proposal are known. Binance has discussed that client assets in the bank will be frozen as part of a tripartite agreement, with the exchange providing them with stablecoins as collateral for margin trading. Money held in a bank could be invested in funds to earn interest to offset expenses.
A Binance representative declined to comment on the situation, as did Bank Frick. The latter cited bank secrecy laws. FlowBank said its license does not include trading in cryptocurrencies and has not disclosed any arrangements with Binance. According to sources, the proposed scheme is still at the stage of improvement and may undergo changes.
Since Binance ended the zero-fee promotion in March, its market share has dwindled, and a lawsuit filed by the CFTC against it has caused concern among some traders. According to CCData, its share in spot volume fell from 63% in February to 44% in early May, and in derivatives from 77% in March to 66% last week.
Source: Cryptocurrency
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