Kraken cryptocurrency exchanges implements a new auditing standards designed to let clients prove their crypto balances.
The exchange said in a blog post that the new feature of provenance is backed by real assets held in their custody.
Kraken passes Proof of Reserves audit by Armanino LLP
The cryptocurrency exchange successfully passes a cryptographic audit conducted by Armanino LLP.
Kraken said that the Proof of Reserves audit conducted by Armanino LLP is the second of its kind conducted on the exchange since 2014.
The audit proves that over $19 billion worth of client Bitcoin and Ether is held by Kraken on its exchange. This includes the $3.5 billion worth of ether held in Kraken’s secure on-chain staking service, the industry’s leading ETH2 validator.
Kraken also said that the audit currently covers just two of the over 100 assets available for trading on our exchange, it adheres to, and seeks to advance, recommended standards for new cryptographic audits that we hope will become widely embraced in the digital asset sector.
Audit To Boost Transparency And Security
In the 13 years since the invention of Bitcoin, it’s estimated that more than $23 billion in digital assets have been lost to hacks and insolvencies.
Jeremy Welch, Chief Product Officer at Kraken, said:
“Security and transparency for our customers has been at the core of our culture as a company, and the core of our practices and operations from the very beginning. Regular Proof of Reserves audits will demonstrate that, for Kraken, our client security and safety are a top priority.”
With the announcement, Armanino has agreed to perform Proof of Reserves audits for Kraken semi-annually, following the attest standards used by the American Institute for Certified Public Accountants, a regularity intended to ensure Kraken meets rigorous standards for accountability.
Noah Buxton, blockchain practice lead at Armanino, said:
“We offer Proof of Reserves because we’re passionate about this industry, and believe it is the future of finance and capital markets. With this audit, we’re taking historical best practices from certified public accounting firms and applying them in a new way that’s incredibly exciting.”
According to the exchange, this regular transparency is designed to minimize trade-offs for client data privacy.
Kraken will provide Armanino only anonymized balance information, meaning no sensitive client data is exchanged. (A technical overview of the audit process, explaining how it leverages the transparency of public blockchains, can be found on our website.)
How to verify crypto balance using Proof of Reserves?
Kraken said in a press statement that users, too, can now verify their bitcoin and ether balances on the exchange at the time of the audit, with a simple three-step process accessible in their accounts.
Here is the process:
- Users need to sign in to their Kraken account
- Follow a simple 3-step process to generate a ‘Record ID’ or ‘Merkle Leaf’ specific to the user’s Kraken account and the audit.
- Enter this ‘Record ID’ on the website of Kraken trusted auditor, Armanino.
By following the process above, users will be able to affirm their bitcoin and ether were held securely by Kraken at the time of the audit.
The verification will reflect account balances at the time of the audit, but will not include any subsequent trades or deposits.
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