Blockchain Australia

Blockchain Australia & 12 Aussie Exchanges Commit to ‘Transparency and Consumer Protection’

Disclaimer This article is for general information purposes only and isn’t intended to be financial product advice. You should always obtain your own independent advice before making any financial decisions. The Chainsaw and its contributors aren’t liable for any decisions based on this content.

In the midst of growing cries for proof-of-reserves, and deafening silence from Australian crypto exchange Digital Surge since pausing withdrawals, Blockchain Australia has released a statement that includes a commitment by 12 local exchanges to “transparency and consumer protection”.

Blockchain Australia and 12 exchanges get on the front foot

Crypto markets and exchanges have been under tremendous pressure of late following the FTX implosion and revelations of widespread fraud and trading of customer deposits. In a likely attempt to allay consumer concerns over the financial health of local exchanges, Blockchain Australia issued a statement on behalf of some of its crypto exchange members affirming a commitment to transparency.

Referring to the 12 crypto exchange signatories in its its statement, the press release said: “[the exchanges] who have come together to make the below statement together with Blockchain Australia, to show that we speak up and stand united for the highest standards to protect users”.

However, it said that in the interim, “to demonstrate our digital currency exchange members’ continuing commitment to transparency and consumer protection”, each of the following exchanges “declare and affirm:

  • Customer balances are held on a 1:1 basis
  • Customer balances are held on a 1:1 basis and are denominated in the client’s currency. Therefore, the digital currency exchange member does not trade its customer balances.
  • Customer balances are held in 100% full reserve
  • Customer balances are held in 100% full reserve and the digital currency exchange is not susceptible to running out of liquid funds for withdrawals. Additionally, the digital currency held is not on-lent to any other party.
  • Ongoing proofs of the above, will be provided through:
    • Annual financial audits, followed by quarterly or monthly self attestations;
    • Onchain proofs; or
    • A combination of the above”.

The statement was endorsed by the following exchanges:

  • BANXA#
  • Binance Australia
  • BTC Markets
  • Caleb & Brown
  • Coinbase
  • CoinJar
  • Crypto.com
  • Dacxi
  • Elbaite#
  • Independent Reserve
  • Luno
  • Swyftx

Coinbase’s affirmation was issued with the additional comment that as a public company with audited financials, it already was subject to a quarterly external auditor review, among other compliance measures.

And in relation to BANXA and Elbaite, it was noted that they do not hold digital currencies on behalf of their customers as they are non-custodial, but that they “otherwise support” the affirmation.

Some were quick to notice the omission of several other crypto exchanges, suggesting that their position is yet to be confirmed.

Coinspot appeared to be facing heat for failing to appear on the list, to which it responded with a tweet from last week’s public statement.

The measures taken by Blockchain Australia are undoubtedly a step in the right direction. However, for those who have been in crypto long enough know that one ought to temper one’s reliance on such statements, however well intended:

“Don’t trust, verify.”