US crypto exchange giant Coinbase is launching an initiative to help encourage more transparency among firms in the industry, particularly in regard to proof of reserves.
In a blog post, Coinbase says it’s exploring new ways to prove reserves using more crypto-native methods, plus announcing a $500,000 developer grant program to encourage others to do so as well.
Coinbase says that following the collapse of crypto exchange FTX, investors in the space deserve assurance that they’ll have the ability to withdraw their funds after depositing to centralized platforms.
The firm lists several general suggestions for how proof of reserves could be done in the future, including on-chain address disclosure with proof of access to the address’ private key.
Says Coinbase’ chief security officer Philip Martin,
“One silver lining in the collapse of FTX is a huge focus on transparency into the assets and liabilities of different crypto firms. At Coinbase, we believe that you deserve the best of both tradfi (traditional finance) and DeFi (decentralized finance). Today, we are the only company in crypto that is providing the transparency and assurance of a public company financial audit. For tomorrow, we are working toward a decentralized system where you don’t have to trust us, or any institution. You only need to trust the math. Everything should be transparent, immutable and verifiable to all.
In order to take concrete steps toward that future world, we are announcing a new developer grant through Coinbase’s 2023 Crypto Community Fund. We’ve allocated $500,000 to support people or teams who are advancing the state of the art in on-chain accounting, privacy preserving techniques related to proof of assets or liabilities (including the application of zero knowledge techniques) and or closely related technologies.”
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