Binance Explores Collaborations with FlowBank and Bank Frick for Enhanced Security Measures and Collateral Solutions

According to reports, Binance is exploring a potential solution to reduce counterparty risk for its institutional clients. Instead of keeping their trading collateral on the crypto platform, these clients would be allowed to store it at a bank. Swiss-based FlowBank and Liechtenstein-based Bank Frick have been mentioned as potential intermediaries for this service. The move is a response to demands from institutional digital asset traders for increased security measures following the collapse of FTX last year, which caused significant losses.

Binance has reportedly engaged in discussions with select professional customers to enable them to use bank deposits as collateral for margin trading in spot and derivatives markets. The details of any potential partnerships with FlowBank and Bank Frick have not been disclosed publicly.

Under the proposed arrangement, client funds held at the bank would be secured through a tri-party agreement, while Binance would provide stablecoins as collateral for margin trading. The funds deposited with the bank could be invested in money market funds, allowing clients to earn interest and offset the cost of borrowing crypto from Binance. However, the specifics of this arrangement are still being discussed and may undergo modifications.

Binance CEO Changpeng Zhao (CZ) mentioned the idea of acquiring a bank and making it crypto-friendly during a recent interview. However, he acknowledged the complexities involved, such as limited jurisdiction and the need to comply with local banking regulators. CZ emphasized that buying a bank doesn’t grant unrestricted freedom to operate as desired.

source