(Kitco News) -
Binance, the number-one global cryptocurrency exchange by market share, will allow institutional investors to custody their collateral off the platform, according to a Bloomberg report published Monday.
Binance said that institutions would instead have the option to post their collateral for leveraged positions with Binance Custody, which will hold their assets in cold wallets rather than the exchange’s internet-connected hot wallets. Once the trades are settled, Binance Custody would then unlock the assets and the user would have access to them again. According to the exchange, Binance Custody is a distinct legal entity launched in 2021 and registered in Lithuania.
The hot wallets of various crypto firms have been subject to numerous hacks and other security issues in recent months. Fears of exchange insiders misappropriating user funds have also increased in the wake of the collapse of FTX, where billions in user funds were allegedly funneled to sister firm Alameda Research.
“Our clients are a lot more conscious of managing risks,” said Catherine Chen, head of VIP & Institutional at Binance. “We hear from our users that they love to trade on Binance, but at the same time they are getting ‘pressure’ from their internal risk control. For them to scale up further activities on Binance, they need to look for ways to help them diversify the on-exchange risks.”
According to a Binance spokesperson, the company’s institutional division, which serves proprietary trading firms, hedge funds, family offices and other large customers, saw new clients increase by 17.4% between Q3 and Q4 2022.
Binance is also looking to increase its staff count in 2023, bucking the trend of other exchanges like Coinbase who have announced major layoffs, with CEO Changpeng Zhao (CZ) saying that the exchange plans to hire 15% to 30% more employees. Binance’s headcount also increased from 3,000 in 2021 to nearly 8000 by the end of 2022.
“We will continue to build and hopefully we will ramp up again before the next bull market,” Zhao said.
