Note that things are not going well for Binance in 2023. According to Kaiko, trading volumes on the site have dropped by more than 30 percent since the beginning of the year. Obviously, it is not only a bearish trend, but also problems in the global economy, which makes crypto investors more cautious.

Despite this, Binance continues to be the largest trading platform in the world. In the last 24 hours, the volume of spot pairs traded on it was just under $4 billion.

The same is true for the derivatives market. Here, the equivalent of almost $39 billion was traded on Binance during the day.

Innovation in cryptocurrency exchanges

As noted by Bloomberg, relevant information about the upcoming innovation was shared by anonymous insiders. They said that Binance’s management is in talks with some major clients about the possibility of using bank deposits as collateral in their positions on cryptocurrency trading pairs. FlowBank and Bank Frick will act as intermediaries for the service.

The crisis in institutional clients’ cooperation with exchanges began after the bankruptcy of the FTX trading platform in November 2022. The event resulted in billions of dollars in losses for investors, which included both large and start-up players.


Above all, the reason for the cryptocurrency platform's collapse was the alleged illegal activity of FTX founder Sam Bankman-Fried and his colleagues. According to prosecutors, the company's top executives created a special hole inside the cryptocurrency exchange that allowed for discreet withdrawals of funds from the platform's users to the accounts of a related trading firm, Alameda Research. The money was then used not only to fund Alameda's trading positions, but also to purchase real estate, fund voters and other personal needs. And because FTX users did not consent to such use of their own funds, it was not possible to do so.

It is this detail that frightens sophisticated investors. After the collapse of FTX, it became clear that in theory crypto exchanges could do anything they wanted with their own users' assets without them even knowing about it. Therefore, trading platforms are now looking for options to regain the trust of the big players. Earlier, special platforms that showcase the assets and liabilities of the trading platform were launched for the same purpose. And some exchanges update them every 15 minutes automatically, which adds credibility to what is happening.


The service delivery model of crypto-exchanges differs from the trading platforms where trades in traditional assets are made. Crypto-exchanges not only support trading but also hold customer funds. Therefore, the latter face higher risks when they conduct large crypto transactions on the exchange.

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According to insiders, customer funds in the bank will be secured by a three-party agreement and Binance will provide stabelcoins as collateral for margin trading. Money in the bank could be invested in money market funds, allowing customers to earn interest and offset the cost of borrowing cryptocurrency from Binance.

Binance representatives have not yet commented on the information, while Bank Frick officials declined to comment, citing bank secrecy laws. At the same time in FlowBank said that the bank’s license does not include operations with cryptocurrencies, without commenting on any arrangements with Binance. Finally, insiders note that the proposed cooperation scheme has yet to be finalised and may change.

In theory, the innovation could improve the position of the exchange. Binance’s market share declined after the platform ended a zero-commission trading promotion in March 2023. A Commodity Futures Trading Commission (CFTC) lawsuit against Binance has also taken a serious toll on the company’s reputation in the eyes of traders. However, the SEC has not been acting in the most logical way with respect to the crypto world of late, so this point can, in principle, be omitted.

In addition, Binance actively complies with local regulations. For example, today it became known that French residents will no longer be able to trade in anonymous cryptocurrencies on this platform. These are DCR, DASH, ZEC, ZEN, PIVX, NAV, SCRT, XVG, FIRO, BEAM, XMR and MOB.

And when it fails to comply with the legal framework, the plafthorm can withdraw from the market. Specifically, in mid-May, Binance employees announced that they were exiting the Canadian jurisdiction.


It looks like this innovation could indeed attract the attention of big investors who don't mind getting involved with crypto. Despite the volatility of crypto, the asset category has outperformed traditional investment vehicles in the first quarter of 2023. Therefore, we can assume that capital holders will be happy with the scheme to keep their money in a bank rather than on an exchange. And then they will start to deal in digital assets as well.