Binance will allow institutional investors to keep their paid crypto for leveraged positions, off the platform. The change will allow investors to enter into contracts with Binance Custody, which will hold assets on the Internet, in a cold storage wallet, Binance said in a statement on Monday. Once the transaction is closed, the assets will now be available to another user.
This feature, called Binance Mirror, can be a great advantage for crypto investors who trade in these markets, because many crypto traders need to hold n ‘hands on the exchange they do business with. However, using a cold storage wallet means that users can continue to trade cryptos during the exchange session without major withdrawals from exchanges. User assets will also be protected from chain hacking, which wallets are vulnerable to.
The collapse of Binance rival FTX in November last year raised fears about the crypto exchange’s ability to protect users’ assets, with regulators investigating FTX for misuse of customer funds.
“This is an exercise that builds the company’s confidence in the security of their money. It is a positive development that shows that Binance is becoming a company that focuses on crypto exchanges,” said Markus. Thielen, head of research and strategy at crypto service provider Matrixport. “However, this may not be enough, because the change will need to work with external parties to eliminate the risk of co-ownership,” added Thielen.
Bloomberg first reported the story.