According to internal sources, Binance has not been working with Spanish bank BBVA to exchange crypto assets, allowing customers to store digital assets in banks rather than platforms.
A recent report by the Financial Times shows that the leading Crypto Exchange has tapped Banco Bilbao Vizcaya Argentaria or BBVA, Spain’s third largest bank.
This arrangement means that the trader’s funds will be kept in the US Treasury’s Spanish Bank, which will then be accepted as a margin for trading in exchange.
This move comes when customers try to take preemptive precautions to ensure that custody arrangements are made so that they retain less assets on the exchange. One insider said the decision was made to reduce the “hypothetical FTX 2.0.”
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Another reason why exchanges want to partner with more traditional financial entities like banks is to meet the needs of traders, with some who think “we prefer to use third parties and put collateral in a safe place.”
In the past, Binance (BNB) clients were able to hold assets directly through the platform itself or through a custodian called Ceffu. Ceffu is known by American officials as “mysterious Binance-related beings.”
Over the past few months, Crypto Exchange has expanded its partner network to include banks such as Sygnum and Flowbank in Switzerland as a way to prevent counterparty risk.
Binance wants to prevent “FTX 2.0”
The collapse of FTX was primarily due to the fact that it did not use third party custody, a key protection that separates customer assets, audits them independently, and maintains customer assets under regulatory oversight rather than exchanges.
Instead, FTX (FTT) has published customer funds in its own book, mixed them into corporate resources, allowing sister company Alameda Research to access those assets. This lack of separation and surveillance allowed large-scale misappropriation from the early days of the exchange until it filed for bankruptcy.
When the exchange collapsed in late 2022, investors were upset as funds were trapped in bankruptcy proceedings. Since the FTX case, the exchange has not held much of its funds as more traders have opted for independent custody arrangements.
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