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- The newly launched service is based on Binance Custody, a regulated institutional digital crypto asset custody platform.
- A top-level executive with Matrixport, Markus Thielen, remarked that Binance’s new service launch signifies that the leading exchange is gradually shifting its focus to become the primary CEX for institutional investors.
As the centralized crypto exchange (CEX) crisis continues to drive discussion, the world’s largest digital asset trading platform plans to improve its institutional services to clients. Accordingly, Binance has introduced cold custody services to allow institutions to store crypto assets offline.
Binance Mirror comes on Onboard
Binance announced on Monday the launch of its off-exchange settlement solution, Binance Mirror, that would allow institutional investors to trade and store cryptocurrency through cold custody. Furthermore, the newly launched service is reported to be under the control of Binance Custody, a regulated institutional digital crypto asset custody platform. The Binance Mirror service involves copying cold-storage crypto assets from the Binance wallet and is held on a 1:1 collateral basis.
In explaining the new service, Binance stressed that the solution comes with more security, allowing traders access to the exchange’s ecosystem without needing to post collateral on the system directly. Binance Custody service, founded in 2021, is a custodian outlet with cold storage that ensures crypto assets’ security against loss, stealing, or internal compromise.
Last March, Binance Custody obtained approval for cold-wallet insurance from Lithuania’s financial regulators. The license allows the exchange to operate an institutional-level crypto asset custody solution. As a result, Mirror makes up over 60 percent of all tokens secured on Binance Custody.
Commenting on the latest development, a spokesperson for the company revealed that the user feedback on the Binance Mirror service has been positive. As such, the exchange is happy to officially announce it to the market, added the spokesperson. However, whether the exchange intends to continue providing similar services to retail users is unknown.
The latest news comes a few days after the world’s largest crypto exchange witnessed a significant drop in liquidity. Outflows of billions of dollars of crypto left the trading platform toward the end of last year. Moreover, the liquidity crunch is attributed to the crisis facing CEXs, worsened by the FTX collapse as investors flocked to self-custody services by leaving centralized platforms en masse.
CEXs Face Possible Extinction
As the demand for self-custody platforms is becoming the industry craze, CEO Changpeng Zhao recently admitted that CEXs are possibly fighting a losing battle to remain in business, especially after the FTX debacle. However, some industry experts opined that the end for CEXs is not near, even as the crypto ecosystem continues to feel the brunt of the FTX collapse.
In a December 2022 publication on Forbes, analysts noted that even though investors realized that the FTX crash was due to fraud, investors remain skeptical of storing their funds in centralized exchanges. The FTX crash might have created a huge mistrust in CEXs, but that does not imply that these CEXs would be out of business soon.
Meanwhile, a top-level executive with a leading virtual asset service provider, Matrixport, Markus Thielen, remarked that Binance’s new service is a laudable effort at building trust with institutional investors, assuring them that their funds are safe. Thielen added that the move signifies that Binance is gradually shifting its focus to become the primary CEX for institutional investors.
