Binance recently announced the successful implementation of the world’s first cryptocurrency triparty arrangement in partnership with a third-party banking partner.
According to the statement, the technology enables institutional investors to securely keep their trading collateral off-exchange with a “trusted bank.”
Binance Expands Its Offerings With A Triparty Solution
The triparty agreement is the first in a series of pilot programs launched by Binance, making it the only cryptocurrency exchange to provide such a solution.
This structure replicates a framework typically seen in traditional financial markets by addressing the issue of counterparty risk, which is a major concern for institutional investors.
It enables investors to distribute their crypto assets based on their risk tolerance. Notably, the collateral held by the banking partner may be in the form of currency equivalents, such as Treasury Bills, which have the extra benefit of being an earning asset.
Catherine Chen, Binance’s Head of VIP and Institutional, underscored institutional investors’ long-standing concerns about counterparty risk in the industry. According to Chen:
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.
According to the November 30 announcement, the solution ensures institutional clients can optimize their collateral and cryptocurrency investments, drawing inspiration from established trading practices in traditional markets.
CryptoCaster Quick Check:
BUSD Stablecoin Support Will End On December 15th
Binance just announced that support for its BUSD stablecoin will be discontinued on December 15th. This follows an earlier announcement in August in which Binance declared its intention to gradually phase off support for BUSD after Paxos, the corporation in charge of generating the stablecoin, was ordered to discontinue minting in February.
According to a blog post published by the exchange on Wednesday, customers will be able to redeem their BUSD holdings until February 2024. Despite the suspension of service on the exchange, Binance promised users that BUSD will always keep a 1:1 backing with the US dollar.
Paxos, the BUSD issuer, has also assured that the stablecoin will be supported and redeemable until at least February 2024.
To ensure a smooth transition, Binance recommended users to withdraw or convert their BUSD assets into other accessible assets on the exchange by December 15th, 2023.
Users can exchange their BUSD holdings for FDUSD, a new stablecoin with no transaction fees. Alternatively, customers can use Binance exchange to exchange their BUSD balances to FDUSD at a 1:1 conversion rate with no costs.
Withdrawals of BUSD will be blocked from December 31st, and any remaining BUSD balances in users’ Binance accounts (except users from Japan, France, Italy, Poland, and Kazakhstan) will be immediately changed to FDUSD at a 1:1 conversion rate.
Users can still deposit BUSD into Binance after this date and manually convert their BUSD to FDUSD at a 1:1 conversion rate until further notice.
Furthermore, Binance said that the collateral assets of Binance-Peg BUSD will be changed to FDUSD at a 1:1 conversion rate in December 2023. Binance intends to make an additional notification after the collateral conversion is complete.
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