Journalist
Tanzeel Akhtar
Journalist
Tanzeel Akhtar
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Binance, the world’s largest cryptocurrency exchange, is working with Spain’s BBVA to offer clients independent custody of their digital assets, according to a Financial Times report published on Friday.
The arrangement is a move by Binance to rebuild investor trust following its record $4.3 billion fine by U.S. regulators in 2023 and the broader industry fallout from the collapse of FTX.
Rebuilding Trust After FTX and Fines
BBVA, Spain’s third-largest bank, has recently begun serving as an independent custodian for Binance, the FT reported, citing two people familiar with the matter.
The move allows clients to hold their assets off the exchange—a shift that reflects growing demand for secure, third-party custody solutions after the FTX implosion left billions trapped in bankruptcy proceedings.
Binance’s partnership with BBVA seeks to mitigate counterparty risk and reassure users amid ongoing regulatory scrutiny. The exchange previously only offered custody through Ceffu, a related entity criticized by U.S. authorities for its opaque relationship with Binance. In early 2024, Binance began offering clients custody options via Switzerland’s Sygnum and FlowBank.
Traditional Banks Warm to Crypto
The collaboration with BBVA also shows the evolving stance of traditional financial institutions toward digital assets. BBVA’s involvement indicates greater mainstream acceptance of crypto, as regulatory frameworks mature in the U.S. and EU.
One source told the FT that BBVA’s established reputation enhances Binance’s credibility. “If you say BBVA, people are like ‘box tick, next’,” the person said, referencing due diligence processes commonly used by investors before trading on exchanges.
BBVA has not only agreed to custody crypto assets for Binance users, but has also expanded its own crypto offerings. The bank now allows Spanish retail clients to trade and store bitcoin and ether through its mobile app and has advised private banking clients to allocate up to 7% of their portfolios to digital assets.
Safer Custody Structure Using U.S. Treasuries
Under the reported arrangement, users’ funds are held by BBVA in U.S. Treasuries, which Binance accepts as margin for trading on its platform. One source said the model is designed to prevent another FTX-style collapse by keeping client collateral in a “safe place.”
This structure separates custody from trading and lending activities—an operational distinction regulators have encouraged following the risks exposed by FTX’s demise.
Crypto Exchanges Adjust to Investor Demands
Following regulatory crackdowns and shifting investor expectations, crypto exchanges like Binance and Coinbase are reassessing their roles as all-in-one platforms. Acknowledging user concerns, Binance is leaning on institutions like BBVA to provide added layers of protection and legitimacy.
Both Binance and BBVA declined to comment on the arrangement.
NYDFS Secures Settlement From Paxos Over Binance Dealings
On Thursday, it emerged that Paxos Trust Company has agreed to a $48.5 million settlement with the New York State Department of Financial Services (NYDFS) over allegations it failed to monitor illicit activity linked to its former partner, cryptocurrency exchange Binance.
The regulator said it found that Paxos failed to properly monitor its relationship with Binance, one of the world’s largest cryptocurrency exchanges.
The penalty includes a $26.5 million fine and a commitment by Paxos to spend $22 million improving its internal compliance systems.
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