Binance, a cryptocurrency exchange, is “borrowing a leaf from the traditional finance playbook,” after it introduced a new platform to connect VIP members with investment fund managers.
The platform, known as Capital Connect, would make connections between qualified individuals and asset managers.
According to Catherine Chen, Head of Binance VIP, the Capital Connect platform will be provided by Binance without any fees or commissions, but Chen claims that the company would ultimately profit from it.
“Typically, where do these investment managers trade? On the platform with some of the deepest liquidity, they trade. Therefore, in the end, we stand to gain,” added Chen.
“By providing the platform, Binance is borrowing a leaf from the traditional finance playbook.” With Edgefolio as an example, Chen stated that such platforms have existed in the TradFi industry for decades.
She did, however, claim that Binance’s platform was the first of its sort in the cryptocurrency industry and that it will work to “improve efficiency and address pain points” for high net worth clients.
All nine levels of VIP users or high-net-worth consumers on Binance are qualified to use the Capital Connect platform.
The exchange, according to Chen, has seen a “very rapid growth of the non-trading type of investors in the past 12 months or so” who don’t want to trade cryptocurrency on their own but are seeking to work with active fund managers to park their assets.
VIP users “represent a very small percentage” of Binance’s more than 128 million total users. Nevertheless, “they do contribute very significant volume or activity across our different product lines,” according to Chen.
“Binance won’t perform due research on the fund managers listed on the Capital Connect platform but will instead accept “only very high-quality” managers. She added that all users must go through the verification process and that they will also need to pass Binance’s verification checks.
“Like Binance’s main exchange platform, Capital Connect won’t be available for users in the United States and other restricted countries,” Chen said.