Binance Partners with BBVA for Off-Exchange Crypto Custody Model

Binance, the world’s largest cryptocurrency exchange, has partnered with BBVA, a leading banking institution based in Spain and Latin America, to introduce an innovative custody model that allows users to store their digital assets outside the exchange [1]. This collaboration marks a significant step in Binance’s efforts to enhance trust among its user base following a $4 billion regulatory fine in November 2023. The partnership also aims to address lingering concerns about counterparty risk after the 2022 collapse of FTX.

Under the BBVA custody model, user funds are held in U.S. Treasury bonds and accepted by Binance as collateral for transactions. This structure creates a clear separation between custody and trading activities, a practice more commonly seen in traditional finance but less so in the crypto industry [1]. By doing so, the model reduces the risk of platform failure impacting user assets, offering a layer of security that many in the sector have previously lacked.

Sources familiar with the initiative noted that BBVA’s strong brand recognition plays a key role in this partnership, as its name can streamline regulatory and compliance processes for Binance users [1]. For instance, one source stated that “mentioning BBVA often checks a box on many companies’ compliance lists.” This underscores how institutional credibility can be a strategic asset in the crypto space, where regulatory scrutiny remains high.

Binance’s move with BBVA aligns with broader trends in the industry. Earlier in January 2024, the exchange had already begun offering similar custody options through partners such as Sygnum and FlowBank [1]. Previously, users had only limited choices, such as holding assets on the exchange or using Ceffu, a “rebranded Binance entity” according to the U.S. Securities and Exchange Commission (SEC). The shift to off-exchange custody represents a growing industry-wide move toward risk diversification and regulatory alignment.

The changing regulatory environment, particularly with the Trump administration’s support in the U.S. and the progress of the EU’s Markets in Crypto-Assets (MiCA) regulation, has made it easier for traditional banks to engage with crypto assets [1]. In July 2024, BBVA announced the launch of services allowing high-net-worth clients to invest in Bitcoin and Ethereum, including advisory services that allocate 3–7% of portfolios to digital assets [1].

The concept of off-exchange custody is gaining traction beyond Binance. In February, platforms such as Deribit, BitGo, and Copper introduced instant settlement options for spot and derivative trades while ensuring user funds remain in custody. In November 2024, OKX partnered with Komainu to offer similar solutions for institutional clients, and in 2023, Bitget enabled off-exchange trading for institutions via Copper’s ClearLoop network [1]. These developments suggest a maturing market where custody and trading infrastructure are increasingly decoupled.

Source: [1] Binance Secures Trust with BBVA’s Innovative Custody Approach (https://coinmarketcap.com/community/articles/6895e32de21b950c870dd2c3/)