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Binance to allow institutions to store crypto with cold custody

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Binance Custody, a custodian platform with its own cold storage solutions, was introduced in 2021 and protects secured assets.

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The Mirror service, which is based on Binance Custody, includes mirroring cold-storage assets via 1:1 collateral stored on a Binance account.

Binance is looking to expand its institutional trading services with cold-custody options amid the centralized cryptocurrency exchange (CEX) crisis.

Binance officially launched Binance Mirror on January 16, an off-exchange settlement solution that allows institutional investors to invest and trade using cold custody.

The recently launched Mirror service mirrors cold-storage assets using 1:1 collateral held on a Binance account and is based on Binance Custody, a regulated institutional digital asset custodian.

Binance stated that the new approach provides improved security by allowing traders to access the exchange ecosystem without directly posting collateral 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."

Binance Custody, a custodian platform with its own cold storage solutions, was introduced in 2021 and protects secured assets against physical loss, damage, theft, and internal collusion. Binance Custody acquired cold wallet insurance in Lithuania in March 2022 to manage an institutional-grade digital asset custody solution. Over 60% of all the assets secured on Binance Custody are represented by Mirror.

It is yet unknown if Binance intends to offer similar cold custody services to retail investors.

The news arrives soon after Binance saw a sharp decline in liquidity, with several billions of dollars worth of crypto departing the platform in late 2022. Investors are turning to self-custody instead of keeping their assets on centralized platforms, which is mainly responsible for the drop in liquidity caused by the crisis among CEXs sparked by the failure of FTX.

Changpeng Zhao, the CEO of Binance, acknowledged that the trend toward increasing self-custody might eventually make centralized exchanges obsolete. The Belgian hardware wallet firm Ngrave secured funding from Binance's venture capital arm in November.

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