Key Takeaways
- Binance is partnering with BBVA to offer off-exchange custody of clients’ assets.
- The collaboration with BBVA follows regulatory pressures and aims to strengthen trust in crypto trading.
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Binance is joining forces with BBVA, Spain’s second-largest bank, to deliver off-exchange asset custody services in an attempt to give customers a safer way to store and manage their crypto assets, the FT said Friday, citing people with knowledge of the custody arrangement.
Under the custody structure, customer funds are held by BBVA in US Treasuries, and Binance accepts these Treasuries as margin for trades on its exchange. In other words, Binance will not directly hold or use traders’ funds; these funds will be kept separately.
The arrangement is designed to protect investors and help prevent a repeat of the FTX collapse, where customers’ funds got stuck or lost because the exchange didn’t keep them safely separated or properly managed.
Binance has intensified efforts to strengthen customer confidence in trading on the exchange since its high-profile settlement with US regulators in late 2023 over anti-money laundering violations.
Early last year, the firm began allowing customers to use independent custodians, including Switzerland’s Sygnum and FlowBank. The new agreement with BBVA is expected to help it win over investors’ trust.
BBVA, which secured authorization to offer retail crypto services in Spain in March, has increased its footprint in the digital asset market. The bank recently rolled out Bitcoin and Ether trading through its mobile app for Spanish clients.
The move also reflects growing acceptance of crypto among traditional banks as US and EU rules provide clearer guidelines on custody, anti-money laundering, and investor protections.
Before clear crypto regulations, many traditional banks hesitated to engage with digital assets due to legal uncertainty and compliance risks.
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