Amid the crisis of centralized cryptocurrency exchanges (CEX), cryptocurrency exchange Binance is taking advantage of cold custody opportunities to improve its institutional trading services.
Binance announced the official launch of Binance Mirror on January 16th. It is an off-exchange settlement solution that allows institutional investors to invest and trade using cold custody.
The newly launched mirror service builds on Binance Custody, a regulated institutional digital asset manager, by mirroring cold storage assets through 1:1 collateral in Binance accounts.
Binance stresses that the new solution will provide enhanced security and allow traders to access the exchange ecosystem without posting collateral directly on the platform, stating:
“Their assets will be kept safe in an isolated cold wallet as long as they have a mirror position open on the Binance exchange that can be settled at any time.”
Launched in 2021, Binance Custody is a custodian platform with a unique cold storage solution to cover assets protected against physical loss, damage, theft or insider collusion. In March 2022, Binance Custody secured cold wallet insurance and operated institutional-level digital asset custody solutions in Lithuania. Mirror is a new product of Binance Custody, with over 60% of his total assets protected by Binance Custody.
“We built Binance Mirror last year and have been testing it with institutional users. User feedback has been positive and we are delighted to officially announce and sell,” said a Binance spokesperson. told Cointelegraph.
It seems unclear if Binance plans to offer a similar cold custody service to retail investors. Binance did not immediately respond to Cointelegraph’s request for comment.
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The news comes shortly after Binance experienced a significant drop in liquidity, with billions of dollars worth of cryptocurrency flowing out of the platform in late 2022. Investors are flocking to self-management instead of storing their assets on centralized platforms.
With the growing tendency to self-manage and CEX on the brink, Binance CEO Changpeng Zhao has admitted that centralized exchanges may one day become unnecessary. In November, Binance’s venture capital arm also invested in Belgian hardware his wallet company Ngrave.