Binance, the largest known centralized cryptocurrency exchange, will allow institutional investors to keep their collateral used for leveraged transactions off the platform.
Binance Mirror
Exchange firm recently announced that users can now hold their collateralized cryptocurrencies in cold wallets. Users will use Qualifed Wallet, a cold storage solution developed by Binance Custody. Users’ assets will be locked with Mirror. Then, the locked assets will be reflected in their accounts on the exchange. After trading, the locked assets will become accessible again. Athena Yu, VP of Binance Custody said:
“Security is a top priority for institutions, who also desire the deep liquidity that the Binance Exchange offers. Mirror brings the best of both worlds. We spent much of last year refining its operations to help our clients unlock the liquidity of their assets held in our cold storage. We’re very excited about where we are today and can’t wait to introduce our upcoming new features that will elevate Binance Mirror’s functionality even further.”
Binance Takes an Enterprise-Focused Approach
Most crypto traders today need to hold assets as collateral for their leveraged trades on the exchange they trade on. Mirror allows users to keep their collateral in their wallets, eliminating third-party platforms. Using a cold wallet will also protect traders against on-chain hacking attacks.
With the FTX incident last year, many investors’ trust in cryptocurrency exchanges had decreased, and users began to question whether their assets were safe. With this move by exchange firm, users are protected against on-chain attacks while at the same time securing their assets. Markus Thielen, head of research and strategy at crypto services provider Matrixport said:
“This an exercise to build trust among institutions that their funds will remain safe. Its a positive development that shows Binance is moving toward becoming an institutional-focused crypto exchange. However, this might not be enough as exchanges will likely have to work with external custodians to completely eliminate risks around collateral ownership”
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