summary
- Binance will enable larger traders to store assets with independent banks such as Sygnum and Flow Bank.
- After US regulators imposed a $4.3 billion fine on Binance, there was a change in how customer assets were held.
- The recent $40 million funding injection received by Sygnum Bank enhances its ability to attract a wider range of customers.
Binance tackles counterparty risks by implementing bank custody solutions.
This strategic shift enables certain traders to choose renowned Swiss banks like Sygnum Bank and Flow Bank to safeguard their assets. It marks a departure from Binance’s previous policy, which restricted clients to storing assets either directly on the exchange or with Ceffu, its exclusive institutional custody partner.
As per a recent report from the Financial Times, a crypto hedge fund manager expressed feeling more confident about utilizing a regulated institution:
“I’d much rather park my money with a Swiss bank than Binance.”
Incorporating independent banks into the custody system directly addresses traders’ demand for regulated and secure banking alternatives, notably amplified after FTX’s $9 billion fund loss in 2022. Binance’s decision comes amidst its own precarious situation, facing a hefty $2.7 billion fine from the CFTC for derivatives trading breaches. The exchange’s former CEO, Changpeng ‘CZ’ Zhao, remains entangled in a regulatory dispute, with his sentencing scheduled for February.
Sygnum Bank Expands
Sygnum Bank, a key custodian for Binance, recently completed a successful funding round, securing $40 million. This financial boost is poised to enhance Sygnum’s expansion and innovation efforts, enabling the provision of sophisticated, regulated products and services.
According to a press release, the funds will be utilized to broaden Sygnum’s presence in new markets and accelerate the development of its fully regulated products, including its B2B platform, which currently supports the crypto offerings of over 15 banks and financial institutions worldwide.
Sygnum’s growth trajectory and emphasis on secure crypto solutions reflect the industry’s shift towards regulated trading environments. Binance’s strategic direction and Sygnum Bank’s expansion align with the crypto sector’s trend towards increased regulation, institutional participation, and security. Overall, these developments indicate a maturing market that prioritizes customer protection, compliance, and stability.
