• Binance’s Asia-Pacific head Leon Foong says that a full audit of the exchange’s reserves will take a while due to the crypto learning curve of big accounting firms.
• The first Bitcoin PoR report was published with auditing firm Mazars, but they have since announced they will no longer be working with crypto clients globally.
• Binance is now working to separate its collateral from customer funds and publish a more comprehensive proof of reserve statement.
Binance’s Reserve Audit Delayed
Binance Asia-Pacific head Leon Foong recently told Bloomberg News that a full audit of the exchange’s reserves may be „some way off“ due to the difficulty traditional accounting firms face in understanding the cryptocurrency sector. This comes after Mazars, who Binance previously worked with for their first Bitcoin proof of reserve (PoR) report, announced they would stop working with crypto clients globally.
Challenges for Accounting Firms
Foong explained that the challenge for traditional accounting firms is twofold: one being that it isn’t their core competence and two being that there is much scrutiny if they get it wrong. He also noted that these firms lack agreed standards when it comes to challenges such as price volatility within the crypto market.
Separating Customer Funds
In light of this, Binance is now working to separate its collateral from customer funds and publish a more comprehensive proof of reserve statement. The first reserve report was criticized for not including liabilities alongside assets; however, CEO Changpen Zhao clarified that there were no outstanding loans and auditing liabilities was harder than expected.
Big Accounting Firms Learning Curve
Despite this setback, Foong still believes that a full audit can happen eventually once big accountancy firms have learned enough about cryptocurrencies to do so effectively and accurately without risking mistakes or scrutiny from investors or regulators alike.
In conclusion, Binance’s audit delay highlights some unique challenges faced by traditional accounting firms when dealing with cryptos due to lack of agreed standards, as well as difficulties in assessing liabilities and separating customer funds from collateral reserves. However, once these issues are addressed through better education on cryptos by major accountancy firms, we can expect Binance to move forward with their audit plans in order to provide greater transparency into their operations..