Amid the crisis of centralized cryptocurrency exchanges (CEX), crypto exchange Binance is moving to improve its institutional trading services with cold custody opportunities.
Binance announced on Jan. 16 the official launch of Binance Mirror, an off-exchange settlement solution that enables institutional investors to invest and trade using cold custody.
The newly launched Mirror service is based on Binance Custody, a regulated institutional digital asset custodian, by mirroring cold storage assets through a 1:1 collateral on Binance account.
Binance emphasized that the new solution enables more security, allowing traders to access the exchange ecosystem without having to post collateral directly on the platform, stating:
“Their assets remain secure in their segregated cold wallet for as long as their Mirror position remains open on the Binance Exchange, which can be settled at any time.”
Launched in 2021, Binance Custody is a custodian platform with its own cold-storage solutions, covering secured assets against physical loss, damage, theft, or internal collusion. In March 2022, Binance Custody secured a cold wallet insurance in Lithuania to operate an institutional-grade digital asset custody solution. Mirror is a new product of Binance Custody, accounting for more than 60% of all assets secured on Binance Custody.
“We built Binance Mirror last year and have been testing it with our institutional users. User feedback has been positive and we are happy to announce and market it officially now,” a spokesperson for Binance told Cointelegraph.
It appears to be unclear whether Binance is planning to provide similar cold custody services to retail investors. Binance did not immediately respond to Cointelegraph’s request to comment.
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The news comes shortly after Binance experienced a massive drop in liquidity, with several billions of dollars worth of crypto leaving the platform in late 2022. The liquidity decline is largely attributed to the crisis of CEXs fueled by the collapse of the FTX crypto exchange, with investors flocking to self-custody instead of storing their assets on a centralized platform.
Amid the growing self-custody trend and the crisis of CEXs, Binance CEO Changpeng Zhao admitted that centralized exchanges may no longer be necessary one day. In November, Binance’s venture capital arm also invested in Belgian hardware wallet firm Ngrave.