In a significant step towards restoring confidence in centralised crypto trading, Binance has teamed up with Spanish banking giant BBVA to provide independent custody services for customer assets. The move follows increased scrutiny and investor anxiety in the aftermath of the FTX collapse and Binance’s own regulatory hurdles.
According to a report by the Financial Times, the partnership enables Binance users to store their funds with BBVA, one of Spain’s most reputable financial institutions. The assets will reportedly be held in US Treasurys at the bank, which Binance will accept as margin for trading on its platform.
A Push Towards Traditional Financial Safeguards
The collaboration with BBVA represents a growing trend of centralised crypto platforms seeking legitimacy and stability by aligning with traditional banking structures. Binance’s custody arrangement is aimed at reducing counterparty risk and providing users with the peace of mind that their funds are backed by bank-held collateral.
The FT report cites sources familiar with the matter who claim that this is part of Binance’s broader plan to partner with a select number of banks for independent asset custody. BBVA stands out due to its strong name recognition and credibility within the financial industry, potentially enhancing user trust.
In addition to BBVA, Binance has previously partnered with Switzerland’s Sygnum and FlowBank to serve as independent custodians. These alliances are part of Binance’s effort to bridge the gap between institutional investors and the volatile world of crypto trading.
Improved Access and Off-Ramping for European Users
Alongside the BBVA partnership, Binance also launched a new service on Thursday for its European customers. The feature allows users to convert crypto to fiat and withdraw directly to Mastercard, with near-instantaneous processing across the European Economic Area and the United Kingdom. The move is expected to make off-ramping of funds smoother and more accessible for retail and institutional users alike.
Before such custodial services were introduced, users had to rely entirely on Binance for the storage and security of their assets. The integration of credible banks into the custody process introduces a regulated layer of protection that was previously absent.
Lessons from the FTX Collapse and WazirX Debacle
The collapse of FTX in 2022 served as a major wake-up call for the industry. Customers lost access to funds, and institutional investors such as Genesis Trading were locked out of investments worth hundreds of millions of dollars. These failures triggered widespread regulatory clampdowns and shook user confidence across global crypto markets.
More recently, Indian exchange WazirX, which once maintained strong ties with Binance, froze withdrawals for its 16 million users following a severe security breach. The incident reignited investor concerns about the safety of funds on centralised exchanges.
WazirX attempted to link Binance to the crisis, seeking help to recover user losses. However, Binance quickly distanced itself, stating that WazirX’s management should take responsibility. A Binance spokesperson said the attempt to shift blame was a “disappointing deflection tactic” and that the focus should remain on WazirX being held accountable for the lost assets.
Restoring Confidence through Collaboration
As trust in crypto exchanges remains fragile, Binance’s shift towards regulated financial custodians could mark a turning point. By involving well-established banks like BBVA, Binance hopes to assure its users of the safety and accessibility of their funds, even in times of market volatility.
The integration of traditional banking safeguards may also help Binance appeal to more cautious investors and regulatory bodies. It signals an evolution of the crypto industry, one that leans on long-standing financial institutions to provide the credibility that many exchanges currently lack.
