Binance Will Allow Institutional Investors to Keep Collateral Off the Crypto Exchange

Institutional investors can post collateral from the cold wallets with Binance Custody, the crypto exchange said.

AccessTimeIconJan 16, 2023 at 12:15 p.m. UTC
Updated May 9, 2023 at 4:06 a.m. UTC

Binance will allow institutional investors to keep their collateralized crypto used for leveraged positions, off the platform.

The exchange will enable investors to post collateral with Binance Custody, which will hold the assets off the internet, in cold storage wallets, Binance said in a statement on Monday. Once trades are settled, the assets would then become accessible to the user again.

The feature, called Binance Mirror, could be a major blessing for crypto investors trading in the leveraged markets as most crypto traders have to keep their collateral on the exchange for trading. However, using cold storage wallets means users can continue to trade crypto during volatile sessions without massive outflows on an exchange.

Users' assets would also be protected against on-chain hacks, to which hot wallets are vulnerable.

The collapse of Binance's rival FTX in November prompted fears about crypto exchanges' ability to keep users' assets safe, with regulators probing FTX over the misuse of customer funds.

"This an exercise to build trust among institutions that their funds will remain safe. Its a positive development that shows Binance is moving toward becoming an institutional-focused crypto exchange," said Markus Thielen, head of research and strategy at crypto services provider Matrixport.

"However, this might not be enough as exchanges will likely have to work with external custodians to completely eliminate risks around collateral ownership," Thielen added.

The news was reported earlier by Bloomberg.

UPDATE (Jan. 16, 12:44 UTC): Adds additional detail and context throughout. Adds comment from Matrixport.

UPDATE (Jan. 16, 15:42 UTC): Adds link to Binance announcement and removes Bloomberg references from headline and text.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Parikshit Mishra

Parikshit Mishra is CoinDesk's Deputy Managing Editor responsible for breaking news coverage. He does not have any crypto holdings.

Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.