In brief<\/p>\n
Binance has tapped Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second-largest bank by assets, to hold client collateral off the exchange in its most prominent custody deal yet.<\/p>\n
Through the partnership, traders can keep collateral such as U.S. Treasuries with BBVA, which Binance will accept as margin for trades, according to an initial report<\/a> from the Financial Times citing persons familiar with the matter.<\/p>\n \ufeff<\/p>\n The deal would potentially put one of Spain’s biggest banks at the center of Binance\u2019s custody network. BBVA holds about \u20ac772 billion in assets (US$835 billion).<\/p>\n The arrangement with BBVA is structured so that funds remain with the bank rather than the exchange. While it qualifies as a custody arrangement, the specific mechanism involves BBVA holding client funds in the form of U.S. Treasuries, which Binance accepts as margin for trades.<\/p>\n The move comes as major global crypto exchanges expand their use of independent custodians to rebuild trust after FTX\u2019s 2022 collapse<\/a>. For Binance, it follows the fallout of a $4.3 billion U.S. penalty<\/a> for anti-money-laundering failures in 2023, as well as the conviction and brief imprisonment<\/a> of its founder, Changpeng Zhao.<\/p>\n \u201cThis is one of the clearest signs yet that crypto market infrastructure is maturing to TradFi standards,\u201d Pauline Shangett, chief strategy officer at non\u2011custodial crypto exchange ChangeNOW, told Decrypt.<\/p>\n A “non-trivial improvement” in trust<\/p>\n From a market structure perspective, the custody of traders’ margin in U.S. Treasuries held by a major regulated bank like BBVA \u201cintroduces a level of segregation and safety that crypto venues have historically lacked,\u201d Shangett said.<\/p>\n \u201cIt reduces exposure to the exchange\u2019s operational risks and brings crypto trading margins closer to the same protections you’d expect in traditional derivatives markets,\u201d she explained. \u201cIn an industry where counterparty blowups have erased billions overnight, that\u2019s a non-trivial improvement in trust.\u201d<\/p>\n Binance and BBVA\u2019s move \u201csignals market maturity,\u201d Giorgia Pellizzari, head of custody at Hex Trust, told Decrypt. \u201cHolding client collateral in highly liquid, low-risk instruments such as U.S. Treasuries meaningfully reduces counterparty risk and strengthens trust in trading venues.\u201d<\/p>\n More broadly, a shift in how crypto platforms manage risk and trust is also underway, according to Han Qin, CEO of tokenized equity platform Jarsy.<\/p>\n \u201cParking crypto margin in U.S. Treasuries with a regulated bank is as close as you get to a safety net in this industry: it won’t erase all risk, but it raises the floor on trust,\u201d Qin told Decrypt.<\/p>\n BBVA\u2019s move with Binance \u201cshows big banks aren’t just watching crypto anymore\u2014they’re looking for ways to plug in where TradFi safety meets digital asset growth,\u201d Qin said.<\/p>\n