A new report by CryptoQuant analyzes the transparency of five major crypto exchanges based on their proof-of-reserves (PoR) practices. The rankings showed that Binance leads while others like Bybit, OKX, Kraken, and Coinbase lag behind.
PoR Rankings
The report evaluated the reserve ratio of each exchange, which is calculated by dividing the net customer balance by the platform’s total balance. Binance ranked first in transparency, consistently maintaining a coverage level above 100% and timely publishing its PoR reports on a monthly basis.
OKX followed closely behind, reporting a capital backing rate that also remains above 100%, though slightly below Binance's. The exchange publishes disclosures monthly and without delay.
Bybit ranked next with a reserve ratio ranging between 105% and 115%. The platform recently improved its disclosure practices by shifting from bi-monthly to monthly reporting.
Kraken received the fourth spot, maintaining backing figures above 100%. However, it has published only four reports since November 2022, highlighting the need for more frequent updates according to the analysis.
Coinbase is ranked last, as it has yet to publish any PoR report.
Coinbase Fails to Reveal Reserves
CryptoQuant noted that Binance and OKX are currently setting the industry standard due to strong reserve coverage and consistent, on-time reporting. While Bybit and Kraken are making improvements, Coinbase stands out as the only exchange among the five that has not provided any PoR data.
Critique of PoR Practice
Proof-of-reserves is a method used by crypto exchanges to demonstrate that they hold enough digital assets to cover customer deposits. This transparency measure became popular among institutions following the collapses of major crypto platforms like FTX and Mt. Gox, which left investors uncertain about the safety of their funds.
Despite the growing adoption, the practice has faced criticism from notable crypto industry figures. Michael Saylor recently termed it a "bad idea," arguing that disclosing wallet addresses—often part of the PoR process—introduces serious security risks. He asserted that no professional security team would recommend making wallet structures public.
The CryptoQuant report emphasizes the importance of transparency in the crypto industry, especially in light of recent platform collapses. Transparent practices like PoR can help restore customer trust in crypto exchanges.
