2023 Binance Security Report: Insights and Analysis
Institutional investment plays a key role in the future of cryptocurrency adoption. In 2022, we saw many companies exploring new interstate-in blockchain technologies with companies like BlackRock making significant partnerships with Coinbase.
The effect this is having on the market is slow, but suggests that this current bear market is only temporary and something that will eventually come to an end as more traditional businesses begin to make larger investments into blockchain technology.
Recognizing this, Binance has outlined its security report for 2023, specifically targeting institutional custody and how they plan to keep assets secure for major corporations that want to develop new web3-based products.
Governance and risk management
Binance states that their number one priority is to boost customer confidence with strong governance and risk management measures for institutional investments. In order to do so, Binance has laid three layers of defense.
The first line of defense is a focus on day-to-day operational functions that ensure their services are working properly. Second is an advisory board that oversees day-to-day operations and improves risk management. Then, finally, is an auditing measure which assures that the first two lines of defense are working as they should.
Institutional grade security
Another aspect of Binance Custody is how it segregates institutional investments so that liquidity from separate corporations does not pool together. These individual investment pools are then safely guarded with cryptographic keys that are entrusted to the institution investors using Binance’s custody services.
Taking custody a step further, Binance also insures the assets that are held in their cold storage solutions to ensure customers are confident that their funds are safe. This is a major benefit for investors because cryptocurrencies by nature are uninsured and can be lost forever.
Privacy protection
Binance has also created a long series of policies that have been put in place to better protect the privacy of their clients to keep their funds safe and secure. Although the information on the blockchain is public and transparent to everyone, it is still in many investors’ best wishes to remain discrete because the large amounts of liquidity they are investing into are uninsured assets.
Policies cover a large range of different security measures including cybersecurity frameworks to help reduce the risk of malware and data loss. They also have service policies to help prevent their systems from being overworked and clogged, keeping Binance Custody services available at all times.
Fraud protection
Binance also has systems in place to prevent fraud which was a major issue in 2022. Insolvency and mismanagement of customers' funds created massive controversy in 2022, so it is imperative that Binance avoids these problems from occurring within their businesses.
To do so, Binance Custody provides customers with a complete and comprehensive overview of all the activities made within their investments. This enables companies to identify if funds are being used improperly or if someone has made a mistake.
Moreover, Binance Custody offers a multi-sig wallet to their customers so that businesses can use cryptocurrencies without giving full control of a wallet to one single person. Instead, managing company funds on-chain requires multiple people to sign each transaction, ensuring that everyone is held accountable.
Binance in 2023
Binance, along with many other centralized exchanges, has a lot of work ahead of them in 2023 because of the prominent failures that we saw throughout 2022. Insolvency and fraud both pose a massive risk to investors and they must be mitigated if corporate adoption of blockchain technologies can be pursued with confidence.
