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According to Bloomsberg, Binance is preparing a proposal to allow some institutional clients to maintain their trading at a bank, and no longer on a single exchange, in order to reduce numerous operational risks. The selected financial intermediaries would be the Swiss FlowBank and Bank Frick, based in Liechtenstein.
The proposal was made to a group of professional customers, for a configuration that would effectively allow them to use traditional bank deposits as collateral for spot trading and derivatives products. Bloomberg also said none of the parties involved has yet to comment on the matter, citing bank secrecy laws, as happened with Bank Frick.
Exchanges operate differently than traditional finance, as they facilitate trading, but are also responsible for custody of assets. Which makes it all the more complicated in the scenario in the event of a bankruptcy. The version discussed would consist in offering the possibility of taking advantage of blocked bank deposits through a tripartite agreement, with the exchange lending stablecoins as collateral for margin trading.
About Binance
Binance is a company that operates a cryptocurrency exchange platform, founded in 2017. As of May 2021, it was the world's largest digital assets marketplace in terms of trading volume. The founder of the company is Changpeng Zhao, known as CZ, a Chinese developer who previously developed high frequency trading software.
Binance was initially headquartered in China but was later moved out of the country due to increased restrictions on cryptocurrencies. Binance was founded in 2017 in China by Changpeng Zhao, a Chinese developer who previously founded Fusion System and was part of the Blockchain.com team.
The company moved its servers and headquarters out of China and Japan before the Chinese government banned the digital goods trading platforms in September of the same year. In March 2018, the company underwent a new move, this time to Taiwan.
As of January 2018, Binance has been the platform with the highest trading volume among cryptocurrency exchanges, amounting to $1.3 billion. One of the biggest competitors is Coinbase, which will go public in 2021. In March, the company announced its intention to open an office in Malta after stricter regulations were introduced in Japan and China.
In September 2019, perpetual futures contracts became available, allowing for leverage of up to 125 times the contract value. In June 2021, Binance's trading reached $668 billion, tenfold the results of July 2020.
