Binance has teamed up with BBVA, one of Spain’s largest banks, to serve as an independent custodian for customer funds, according to the Financial Times, which cited two people familiar with the deal.
The arrangement is intended to rebuild trust in centralised cryptocurrency platforms after scandals like the FTX collapse and Binance’s own run-ins with regulators. Under the deal, Binance users can store assets with BBVA, backed by bank-held collateral. Similar agreements have been made with Switzerland’s Sygnum and FlowBank.
The FT reported that customer funds held with BBVA are kept in US Treasuries. Binance then uses these assets as margin for trading on its platform, which could lower counterparty risk.
Binance did not confirm the details when contacted by Cointelegraph, saying only that it had received the request for comment.
A step towards safer storage
Sources told the FT that Binance has only a small number of banking partners for independent custody, but BBVA’s well-known name may boost trust among users.
On Thursday, Binance also introduced a service that lets European users convert cryptocurrency to fiat and withdraw directly to Mastercard accounts, with near-instant availability. The feature is open to users in the European Economic Area and the UK, aiming to make cashing out simpler.
Before such banking partnerships, Binance customers relied entirely on the exchange to store their assets. Using established banks for custody adds an extra layer of protection – something with which the cryptocurrency sector has struggled since high-profile collapses.
When FTX failed in 2022, many customers were locked out of their accounts, facing major financial losses. The exchange held about US$175 million in investments from Genesis Trading alone, highlighting the risks of keeping all assets under a single entity’s control.
Lingering doubts over fund access
Concerns about frozen funds surfaced again after Indian exchange WazirX, once closely linked to Binance, halted withdrawals for its 16 million users following a major security breach.
WazirX sought Binance’s help to cover the losses, but Binance disputed the need, saying: “Their [WazirX’s] attempts to shift responsibility is a disappointing deflection tactic, but it should not distract anyone from the glaring issue to be addressed here: the need for the WazirX team to be held accountable for user funds lost under their management.”
(Image by Ramon Perucho)
See also: The GENIUS Act: Does America’s new stablecoin framework create more problems than it solves?
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