Binance allows holding assets in third-party custodians
Binance now offers clients the option to safeguard their assets with independent custodians. Learn more about this development here at Gamdom.
Binance allows holding assets in third-party custodians
Binance, one of the world’s largest crypto exchanges, has contributed to Bitcoin (BTC)’s rise to prominence. However, its reputation faced challenges after the fall of FTX Trading Ltd in November 2022. Despite these setbacks, traders still rely on Binance as an exchange but the demand to hold their assets with a third-party custodian grew stronger.
On January 30, 2024, Binance officially announced support for independent bank custody. Two of the first options that they offered were Sygnum Bank and Flow Bank, both based in Switzerland. This is a triparty arrangement between Binance, the banks, and clients officially starting in January 2024 moving forward.
Why did Binance start independent bank custody?
Binance has been working on the triparty arrangement for the past 2 years. They were aware of the growing concerns over asset safety considering that they keep getting in conflict with the Securities and Exchange Commission (SEC).
Independent banks have more regulatory oversight, making them safer custodians than any exchange. Thus, making them better candidates for safekeeping cryptocurrency, especially if they are based in countries where regulations protect ownership of virtual assets. One such country is Switzerland which is currently the popular option among traders seeking secure custodial solutions.
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Why were there security concerns over Binance custody?
The SEC has always been strict against crypto trading platforms because virtual assets aren’t recognised as securities under their existing frameworks. Their attack on Binance began in September 2021 along with Coinbase for unlawful solicitation of US customers.
Binance stood strong against allegations but the US Department of Justice (DoJ) had to operate within the SEC’s guidelines. It soon amounted to the DoJ fining Binance $4,000,000,000 in November 2023. In December of that year, Binance noted a commitment to compliance and admitted to taking full responsibility for past conduct.
Despite these challenges, Binance continues its service as an exchange worldwide but they are now under robust monitoring with regulators regarding its commitment to compliance.
What does this mean for users?
Users can still utilise Binance as a trading platform. However, you now have the option to keep your assets out of the exchange. That means every crypto you buy or offer to sell doesn’t have to be held by Binance anymore. You can send your assets to and from an independent bank and with other services.
For example, if you’re planning to sell your winnings from Bitcoin casino games, then you don’t need to send it only to your Binance wallet. Instead, it can send them from your casino wallet to your account on either Sygnum Bank or Flow Bank where it’s under the protection of Switzerland’s regulations.
Binance still has the option to hold clients’ assets should they wish it. This is a great option for those who prefer a familiar system or have already linked easy transactions between their Binance and Gamdom wallets.
In essence, users and Gamdom players now have more flexibility and options regarding the custody of their assets, allowing them to choose a solution that aligns with their preferences and needs.
