Proof of Reserves: The Time is Now
Establishing Best Practices to Build Trust in the Digital Assets Industry
Proof of Reserves Must Be The Industry Standard for Increasing Trust & Transparency in Digital Asset Platform Services
Recent events have illustrated the uneven and inconsistent methods for proving the existence of reserves to meet customer liabilities. Investors and customers need assurance that their funds are properly managed or face losses. Digital assets by their very nature offer built-in transparency but, until now, the innate cryptographic ability to audit these assets has been woefully underutilized, despite the low technical barriers to doing so. At this moment, the Chamber of Digital Commerce is calling on every digital asset exchange to adopt a routine Proof of Reserves program.
In May of 2021, the Chamber of Digital Commerce crafted a consistent, industry-wide standard for Proof of Reserves to increase the confidence level of consumers, policymakers, and regulators that exchanges and custodians are managing their assets appropriately. The comprehensive Best Practices resource was meant to serve the industry with practical guidance on the core concepts of Proof of Reserves and implementation. This was the first time the industry has an actionable rubric for adopting this important standard.
Following recent events that have eroded customer confidence in digital asset exchanges, these Best Practices must be implemented and enforced through audits and attestations. It’s time for industry to provide the transparency that customers deserve.