At BIT, we are committed to being the trusted exchange for crypto traders – retail, institutional, and innovators alike.
Partnering with Cactus Custody, Copper, and Cobo, we offer cast iron protection for our users’ deposits. At the same time, a team of world-class technical professionals ensures that due diligence is at the heart of BIT’s operation.
We understand that the fallout from FTX’s collapse has led to concern amongst traders about exchange solvency, and it’s a topic that BIT has taken a lead on.
First and foremost, we have advocated that exchanges start to issue not only proof of reserves, but also proof of liabilities to demonstrate their solvency.
In terms of proof of reserves, BIT will announce the address of our long-term cold wallet at a later date, and will work with the whole industry to implement a practical solution to address the problem of double expenses of reserves.
Regarding proof of liabilities, BIT will publish Merkle Tree proof of user assets and liabilities, while exploring in-depth protection of user privacy and enhancing protocol robustness, such as applying ZK-SNARKs technology.
BIT is also now standing out in the industry with our calls for an end to self-regulation and vertical integration and the start of pragmatic decentralization and specialization.
The most important change, in our eyes, is for exchanges to be encouraged to separate out their asset custody services from their exchange functions. BIT is among the most proactive exchanges that embrace other independent custodian services to integrate into BIT, to custody the assets on behalf of clients. We are one of the earliest exchange to work with Copper to integrate its Clearloop to serve institutional clients.
To this end, through our partnership with third-party custodian providers like Copper, BIT has separated its user assets from the exchange functions. User assets are stored at third-party custodians, with seamless API integration for real-time settlement and access to a full range of BIT's products and services.
Why is this so essential? Because it would prevent the use of deposits for investment activities – speculative or otherwise – and therefore serve to entrench consumer protections.
Extraordinarily, this separation by specialization and independence has existed in traditional finance for decades. So, if it worked for Trad-Fi, BIT is asking why can’t it do the same for DeFi, Web3 and crypto, which is supposed to be the more decentralized system?
Going forward, we will continue to make the case for pragmatic decentralization, transparency, specialization and sound risk management in our industry, and we encourage fellow exchanges to do the same.