Spanish bank acting as independent custodian for clients of world’s biggest crypto exchange.
Binance is working with Spanish bank BBVA to allow customers to hold their assets off the crypto exchange, as it tries to reassure investors following its record fine by US authorities nearly two years ago. Spain’s third-largest bank recently began working as one of only a small number of independent custodians for the world’s biggest crypto exchange, according to two people familiar with the arrangement. The move comes as crypto exchanges try to allay investors’ concerns about trading venues, following the collapse of Sam Bankman-Fried’s FTX in late 2022. That left investor money trapped in bankruptcy proceedings and sent traders racing to pull their funds off exchanges and seek independent custody arrangements. It also reflects a greater willingness recently among traditional lenders to deepen their ties with the crypto industry following the passing of key laws in the US and EU.
The Spanish bank has greater “name recognition” than Binance’s existing partners, said one of the people. “If you say BBVA, people are like ‘box tick, next’,” the person added, referring to the process of due diligence when deciding whether to use the exchange. Binance was fined a record $4.3bn in 2023 by US authorities for failing to prevent money laundering, while its founder and chief executive Changpeng Zhao was sentenced to four months in prison. The company subsequently pulled back from the US but has this year restored some services as regulators take a less hostile approach to the sector.
Early last year the exchange bowed to pressure from customers, allowing them to hold assets with independent custodians including Switzerland’s Sygnum and FlowBank, as a way of mitigating counterparty risk. Prior to that, Binance’s clients could only hold assets either directly on the exchange or through custodian Ceffu, which US officials had described as a “mysterious Binance-related entity”. The move to work with BBVA comes as traditional banks become increasingly comfortable with holding and trading cryptocurrencies and working with digital asset exchanges.
Sentiment has been boosted by the Trump administration’s staunch support for the crypto industry, which has also helped pushed the price of bitcoin to record highs and sent trading volumes soaring this year. BBVA and Binance declined to comment. The custody arrangement with BBVA means that traders’ money sits with the Spanish bank in US Treasuries, which Binance then accepts as margin for trades on the exchange, the person familiar with the arrangement said, adding that the structure is “mitigating a hypothetical FTX 2.0”.
Big crypto exchanges including Binance and Coinbase have built their dominant market positions by acting in multiple roles — such as trading venue, custodian and lender — at once, although the risks associated with this have meant other companies have stepped in to fill some of these roles in the years since FTX’s collapse. The other person familiar with the arrangement said digital asset exchanges including Binance understand traders wanting “to use a third party and have the collateral be in a safe place”. BBVA has been expanding in crypto to meet what it says is growing demand from its retail customers. Last month it launched bitcoin and ether trading and custody services directly through the bank’s mobile app for its Spanish clients. Meanwhile, it has advised its private banking clients to invest up to 7 per cent of their portfolios in crypto assets.
