As a reminder, the topic of validation of cryptocurrency exchanges’ reserves emerged after the collapse of FTX, whose management used its own users’ funds for their own purposes. Overall, the idea of additional transparency is a good one, but it has its critics. In particular, experts also insist on the need to confirm exchanges’ own liabilities. In the case of FTX, the company had liquid assets worth $900 million, but liabilities amounted to the equivalent of as much as $9 billion.

It should be noted that signs of declining user confidence in centralized exchanges are already evident. As representatives of Kaiko note, during the last week trading volumes on the largest trading platforms more than halved. Huobi suffered the most in the ranking, with its volumes falling by more than 80 percent.

Changes in trading volumes on cryptocurrency exchanges over the past week


Here it is also important to understand that it is not just about declining confidence, but also about the fear of messing with the cryptocurrency market in its current state. After all, the more the coins sag, the more scary it is to engage with them for fear of the prospect of further collapse.

How much money do cryptocurrencies have?

An announcement about the integration of reserve confirmation with short instructions appeared on CoinMarketCap’s official Twitter page. The platform notes that the exchanges’ reserve sources have been confirmed by robust audits.

A reserve proof mechanism called Proof-of-Reserves

According to Cointelegraph’s sources, the tool itself displays the following data, which is updated every five minutes:

  • Total assets;
  • A list of cryptocurrency wallets, their balances and statistics on the cryptocurrencies on them;
  • Trading pairs and statistics on them.

In the case of the Binance platform, the situation looks like this.

Binance reserves page

You can find the section under “Exchanges” on the CoinMarketCap homepage.

The reserves proof section can be found in the exchanges section

As an example, there is a screenshot of Binance reserves proof in the instructions. In addition to the largest cryptocurrency exchange, the tool also shows the reserves of KuCoin, Bitfinex, OKX, Bybit, Crypto.com and Huobi. Incidentally, PoR did not appear so quickly on CoinMarketCap by chance: after all, the platform was acquired by Binance back in 2020 for $400 million. At the time, it was one of the biggest deals in the history of the crypto industry.

The fact that Zhao is actively promoting the concept of proving reserves should reflect positively on the confidence of big investors in the cryptosphere as a whole. PoR in a handy form on CoinMarketCap also boosts confidence in crypto by individual investors with relatively small capital. In the future, I would like to see the publication of such data as standard practice for all exchanges, and the methods of gathering this information explained in detail to a wider audience.

Right now, however, some in the blockchain industry are sceptical about publishing such data. They assume that platforms here may publish more attractive information than they actually do.

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The bankruptcy of FTX and other major platforms within the crypto industry is also a concern for financial regulators. Among recent statements on their part is a publication by the Hong Kong Monetary Authority (HKMA), in which the body’s experts express concern about the volatility of crypto and including stabelcoins. In their view, dramatic changes in the industry could have a negative impact on the traditional finance sector as well.

In the case of staplecoins, analysts are most concerned about “sell-offs” of such coins, which could result in a short-term loss of parity between the token and the currency it is backed by. If that happens, investors can buy staplecoins cheaper than their market price, which was especially evident during the collapse of the Terra crypto project.

The problems with stablcoins are causing systematic disruption to the industry, which could affect traditional finance as well. Here’s a relevant quote from regulator representatives.

The growing volume of tokens backed by traditional assets, along with their inherent risks, could make staplecoins a potential amplifier of the influx of volatility from cryptocurrencies into traditional financial assets.

HKMA officials have published a short infographic that shows the correlations between problems in crypto and volatility in traditional financial markets. In a nutshell: a short-term loss of parity of a major stabelcoin like Tether USDT forces its issuing company to make changes to its reserves, which in particularly large volumes leads to a large number of transactions in the traditional currency. This year, however, there have been no problems with USDT and USDC, so the reputation of the issuer of the stabelcoin has not been affected.

HKMA infographic

The HKMA has recommended standardising regular disclosures, which could help regulators in checking the liquidity and risk conditions of companies issuing stablcoins. In other words, the regulator is demanding greater transparency from issuers of such tokens, which could really keep the industry safe from potential collapses of large crypto projects.


We believe this mechanism would benefit the blockchain industry. And while such data does not support a correlation between the amount of reserves and user deposits, there is still more certainty when an exchange has billions of dollars in assets when interacting with it. So the next step is for exchanges to determine how to validate their own liabilities.

What do you think about this? Share your opinion in our Millionaire Crypto Chat. There we will discuss other important developments in the world of blockchain and decentralization.