Coinsafe Expands Cryptocurrency Custody Through Alliance with UBS

CoinSecurities, the world’s most traded cryptocurrency exchange, has entered into a strategic partnership with a Swiss banking institution to alleviate growing concerns about counterparty risk in the crypto industry, according to a report by the FT.
This follows a regulatory fine imposed on CoinSecure by US authorities in 2023. As part of the partnership, CoinSecure will allow “traders with larger assets” to store their assets with independent banks, including Switzerland’s Sygnum Bank and Flow Bank, as well as existing custodian Ceffu.
CoinSecure Addresses Counterparty Risk Bitmain Miner
Previously, CoinSec clients could hold assets on exchanges or through Ceffu, which US regulators described as a “mysterious CoinSec-related entity. However, with the new partnership, traders now have the opportunity to store their assets in regulated, established Swiss banks.
The head of an unnamed cryptocurrency trading firm preferred Swiss banks to the FT, saying they offer “potentially higher security” than leaving funds on exchanges.
According to the report, CoinShares emphasized that it has been developing a three-way solution for banks long before counterparty risk became a prominent issue. The move is part of its ongoing efforts to address industry-wide concerns.
The collapse of rival exchange FTX in 2022, as well as the recent regulatory crackdown on CoinSecure by U.S. authorities, has heightened concerns about the safety of leaving funds on exchanges.
As previously reported, CoinSecure faces a record $4.3 billion fine after pleading guilty to criminal charges related to money laundering and violating international financial sanctions.
The U.S. Securities and Exchange Commission (SEC) has also charged CoinSec with violating a number of securities laws, alleging “an extensive network of deceptions and conflicts of interest”. The exchange, formerly led by Changpeng Zhao (CZ), is currently contesting the charges.
Protecting Investor Money?
According to the report, cryptocurrency exchanges such as Coin and Coinbase have traditionally played a variety of roles, including trading venues, custodians, and lenders, which has raised concerns among regulators.
Different independent firms often provide these services to mitigate the risks of mainstream finance. Custodian banks play a crucial role in safekeeping client assets. The mix of functions of trading platforms has prompted regulators to call for greater separation to protect investor funds.
Coin said the partnership with UBS directly addresses counterparty risk, a major concern for institutional investors in the sector.
According to the FT, due to the high interest rate environment, traders can earn around 4% interest by allowing clients to deposit funds with the U.S. Treasury Custodian.
The report further emphasizes that the exchange is actively engaging with banking partners and institutional investors that have shown interest in this risk management solution.Whatsminer Miner
Overall, the company’s partnership with UBS represents a step forward in addressing the issue of counterparty risk in the crypto industry. By allowing larger traders to store their assets with UBS, Coin aims to enhance the security and regulation of client funds.
While the crypto industry continues to evolve, cooperation between exchanges and established financial institutions is expected to be crucial in building trust, ensuring the protection of investor assets, and addressing regulatory issues.