- Armstrong's Comment on Proof of Reserves
- No Proof of Reserves, But There Are Audits
- Trusting a Custodian
Recently, Coinbase CEO Brian Armstrong explained why the company doesn't plan to provide proof of reserves, despite calls from the crypto community.
Armstrong's Comment on Proof of Reserves
Armstrong addressed concerns by saying, 'Not sure what this is all about, to be honest.' He explained that all transactions related to ETFs on Coinbase are processed on the blockchain, ensuring transparency and visibility. For institutional clients who use special services like trade financing and overnight trades, the situation is different. However, Armstrong reassured that all such trades are eventually settled on-chain, usually within one business day.
No Proof of Reserves, But There Are Audits
Some in the crypto community have called for Coinbase to provide proof of reserves, but Armstrong doesn't think it's necessary. He explained that Deloitte, a major accounting firm, audits Coinbase annually since it is a public company. Armstrong also noted that institutional clients likely don't want their wallets publicly available as it could put them at risk.
Trusting a Custodian
Armstrong also touched on the issue of trust. For their Bitcoin product, cbBTC, Coinbase is a centralized custodian. This means that when people buy cbBTC, they are trusting Coinbase to store the actual Bitcoin. Armstrong noted that customers know Coinbase holds the Bitcoin backing cbBTC.
In summary, Coinbase CEO Brian Armstrong explained that the company doesn't feel it's necessary to provide proof of reserves as they already undergo annual audits. Additionally, the company aims to ensure the safety of large institutional clients.
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