Amid the ongoing crisis of the Centralized Cryptocurrency Exchange (CEX), Binance now plans to improve its institutional trading services by launching cold-custody opportunities.
On January 16, Binance announced the official launch of “Binance Mirror”, an off–exchange settlement solution allowing institutional investors to invest & trade using cold custody. The Mirror service is based on the concept of Binance custody, the regulated institutional digital asset custodian. It involves mirroring cold–storage assets using a Binance account with 1:1 collateral.
Binance emphasizes that this new solution enhances security and allows traders to access the exchange ecosystem without posting collateral directly on the platform. The exchange stated that assets would remain secure in the segregated cold wallet for the time the Mirror position remains open on Binance Exchange.
It was in the year 2021, Binance Custody which is a custodian platform with its own cold –storage was launched by Binance. It covers secured assets against physical loss, internal collusion, and theft. Further, in March 2022, Binance launched cold–wallet insurance in Lithuania to provide an institution–grade digital asset custody solution. The Binance Mirror accounts for approximately 60% of the assets that are secured in Binance custody.
Binance experienced a massive drop in liquidity during late 2022 attributed to the crisis among the Centralized Crypto exchanges that was fueled by the collapse of FTX. It led investors to flock to self–custody instead of storing their assets on centralized platforms.
Thus, seeing the demand for self – custody Binance CEO, Changepeng Zhao agreed that CEX is no longer a necessary trend. As a result, in November, Binance’s venture capital arm invested in a Belgian hardware wallet firm called Ngrave too.