Binance Exchange: We are the first in the world to enter into an OTC trading agreement with a bank

The world's largest crypto exchange Binance has entered into an agreement with an unnamed banking partner in order to attract large investors and legal entities and eliminate counterparty risks.

Binance management said the agreement will allow institutional investors to continue over-the-counter trading with collateral that will be controlled by the partner bank.. The arrangement should eliminate counterparty risks, which are a major concern for institutional investors today.. We are talking about creating an infrastructure that resembles a traditional financial market. Investors will be able to proportionally distribute their crypto assets depending on their risk tolerance level.

Collateral held by a partner bank may be in the form of treasury bills. This will provide an additional benefit since cash equivalent is an income-earning asset. Binance does not name the financial organization with which the partnership agreement has been concluded, however, the crypto exchange claims that other trading platforms do not yet have similar agreements with banks.

“Counterparty risks in the crypto industry have been haunting institutions for a long time. Our team, consisting of experts in cryptocurrencies and traditional finance, has been studying a possible trilateral banking agreement to solve the problem for over a year. We have developed a solution thanks to which large companies will be able to optimize crypto-currency investments, working according to the model of trading behavior in traditional markets. We are actively in discussions with several banking partners and institutional investors who are very interested in this initiative,” explained Binance Head of Institutional Investments Catherine Chen.

Binance is preparing the foundation for the launch of Bitcoin exchange-traded funds in the United States, which many market players have been waiting for a long time. Recently, former New York Stock Exchange (NYSE) President Tom Farley suggested that Bitcoin ETFs would attract a lot of capital to the crypto market.