As the crypto industry rallies around the transparency of Proof of Reserves (PoR) audits, Kraken is encouraged to see a greater focus be placed on proof, rather than promises.
However, as others rush to catch up, we have observed attempts by other platforms and exchanges to pass off diluted and misleading methodologies as a Proof of Reserves audit.
Aside from causing marketplace confusion, these incomplete practices being touted as Proof of Reserves audits will erode trust and undermine the shared mission of accelerating financial freedom and inclusion for all.
In order to deliver the level of transparency clients deserve, the crypto industry at large must adopt rigorous standards surrounding Proof of Reserves audits. Amid the chaos of the past month, the industry has failed to explain what Proof of Reserves audits should truly entail and convoluted the process in order to cash in on the hype.
Crypto stakeholders that do not understand the actual purpose and proper application of Proof of Reserves audits are at risk of being deceived. Clients are now presented with misleading and incomplete claims of Proof of Reserves, leaving them open to deception and therefore financial harm. Kraken voluntarily conducted the industry’s first Proof of Reserves audit and set a legitimate standard by accounting for not only our crypto balances, but also our client liabilities under the supervision of an independent auditor.
Kraken believes that Proof of Reserves audits must include the following five components. Failure to include one of these five means that, in Kraken’s…