Binance partners with BBVA for secure crypto custody post-FTX crash

Binance has reportedly formed a partnership with BBVA, a major Spanish bank, to provide independent custody for customer funds, according to a report in the Financial Times citing sources familiar with the arrangement[1]. This collaboration is part of a broader initiative to restore trust in centralized crypto exchanges, particularly in the wake of the FTX collapse and Binance's own regulatory challenges[1]. Under the arrangement, Binance users can now store assets through BBVA, which adds a layer of security by offering bank-backed collateral[1].

In addition to BBVA, Binance has also partnered with Switzerland’s Sygnum and FlowBank to serve as independent custodians of customer assets. These collaborations aim to create a safer and more regulated environment for institutional investors to interact with the crypto ecosystem, as traditional financial institutions increasingly step in to provide custody solutions[1].

The Financial Times noted that Binance has limited its custodial partnerships to a small number of banks, with BBVA being highlighted for its strong brand recognition, which adds to the perceived trust in the arrangement[1]. This move is seen as a strategic step to reassure users and reduce the risks associated with having assets stored solely on the exchange.

In a separate development, Binance introduced a new service on August 7 that enables European users to convert cryptocurrencies into fiat currency and withdraw directly to a Mastercard in near-real-time. This feature is designed to improve the liquidity and accessibility of crypto assets for users across the European Economic Area and the United Kingdom[1].

Prior to such partnerships, Binance users typically stored their assets directly on the platform. The FTX collapse in 2022, during which customers were locked out of their funds, highlighted the risks of relying solely on a centralized exchange. In that case, FTX was found to have misappropriated customer assets, with around $175 million reportedly tied up from Genesis Trading alone[1].

The recent security breach at India’s WazirX further underscored the need for stronger custodial safeguards. WazirX froze withdrawals for 16 million users following a major incident and attempted to involve Binance in addressing the losses. However, Binance distanced itself, stating that the responsibility for user funds should lie with WazirX[1].

Binance has acknowledged a request for confirmation regarding its partnership with BBVA but has not yet provided further details[1]. The company has previously taken steps to align with regulatory frameworks, such as ending Tether USDT trading in Europe to comply with the Markets in Crypto-Assets (MiCA) rules.

Source: [1]Binance taps Spain’s BBVA to offer safer crypto custody post-FTX: FT (https://coinmarketcap.com/community/articles/6895ce1efbf0d76ec0d0a6f0/)