Binance Authorized to Allocate Customer Funds into U.S. Treasury Bills

Binance’s U.S. operations have secured judicial approval to invest specific customer funds in U.S. Treasury bills. This move is part of a broader strategy to enhance the platform’s security and stability of customer assets.

Legal framework and investment strategy

The court’s approval comes with stringent conditions that Binance must adhere to. The cryptocurrency exchange proposed a plan to manage its corporate assets via third-party advisors, invest customer funds in Treasury bills, and relocate crypto assets to custodians not affiliated with Binance. 

The court just approved it.

Source: SEC

This arrangement is legal as the advisors engaged are independent of any Binance entities. Binance is required to ensure these advisors comply fully with the terms of the consent order and are prohibited from investing in related entities. Furthermore, Binance must disclose all investment-related expenses in its monthly financial reports. 

The company has also been authorized to allocate certain customer fiat funds managed by BitGo towards these Treasury bill investments. These investments are scheduled on a four-week basis, ensuring that Binance retains sufficient U.S. dollars on the platform to fulfill all potential customer withdrawal requests during the investment period.

Custodial and operational adjustments

Alongside financial investments, the court’s order permits Binance to store and transfer assets to wallets controlled by third-party custodians not affiliated with Binance. These custodial arrangements mandate that the wallets be managed exclusively by Binance’s U.S. officers, employees, or the third-party custodians themselves.

 Binance entities are explicitly barred from accessing these wallets or their cryptographic keys, with all transfers and withdrawals requiring dual approval from BAM (Binance America) and the custodians. To align with these changes, Binance is updating its terms of use to inform and educate its customers about the new investment strategy, ensuring transparency and maintaining trust. These updates are critical for informing users how their funds are managed and utilized.

Market impact and transparency

This strategy aims to protect customer assets and enhance Binance’s operational transparency. The timing coincides with Binance’s latest proof-of-reserve report, which indicates that the volume of Bitcoin held in large addresses (wallets holding at least 1,000 BTC) has climbed to a two-year peak. 

This report underscores the growing trust and consolidation of assets within Binance amid evolving market dynamics. By proactively updating its operational approach and adhering to judicial requirements, Binance reinforces its commitment to user security and regulatory compliance, positioning itself as a resilient player in the volatile cryptocurrency market.

The post Binance Authorized to Allocate Customer Funds into U.S. Treasury Bills first appeared on Coinfea.