You would think it would be useful to leave your cryptocurrencies on exchanges, but that is not always the case. Some trading platforms will not move your tokens to cold storage, allowing you to lose them in hacks. Binance has found a solution.
Binance introduces extra secure trading platform
In a press release the Binance Mirror company has announced, a custodysolution that allows institutions to trade cryptos without exchanging them cold storage have to get. The financial contracts are based on tokens that are deposited with the Binance Custody department cold storage lie.
Each trade is backed one-to-one by these assets, which are essentially a kind of mirror. This means that client assets are even more secure. Even if the platform is hacked, the underlying cannot be stolen.
Binance does suggest that trades are completed on the regular platform for institutions, which means they can impact asset prices. Some exchanges offer ‘over the counter(OTC) services, meaning the exchange buys assets directly without making them readily available on the open market. So this doesn’t seem to be the case.
For the time being, this is a service for institutional investors. Despite having just launched, Binance Mirror already represents more than 60% of the assets that make up Binance Custody. This is probably because the crypto exchange has already extensively tested the service and has already persuaded many institutions to use it. Whether there are plans to also make this available to retail investors is not clear.
Binance under fire
Binance has received a lot of criticism recently because the audit it commissioned for its Proof-of-Reserves of its BTC holdings allegedly revealed a gap in its balance sheet. This could mean that Binance is not as safe as we might have thought. The exchange would use part of its tokens to pay out customers who use leverage. The accounting company involved, Mazars, has even stopped its services for crypto companies because of this.
The world’s largest crypto exchange is also no stranger to hacks. For example, cybercriminals stole 7,000 BTC from customers in 2019. The Mirror service contributes to security, making these types of hacks more difficult.