The blockchain industry is at the cutting edge of global financial innovation. Livecoin recognizes transparency of user funds, robust security, and regulatory compliance as key components of building and maintaining the user trust needed for the technology to deliver on its massive promise.<\/p>\n\n\n\n
This page is a hub for information related to Livecoin\u2019s initiatives to enhance the transparency of funds, security, and regulatory compliance, as well as promote sensible policies around digital assets and education in these critical domains. Here, you will find detailed information and timely updates related to these efforts. Anyone interested is encouraged to use this resource to learn more about Livecoin\u2019s approach to transparency and safekeeping of user funds, maintaining robust security, and meeting regulatory requirements. <\/p>\n\n\n\n
Here are the latest developments related to transparency, security, and compliance from across the Binance ecosystem.<\/p>\n\n\n\n
We believe a rising tide lifts all boats. Building trust is an ongoing process, and all players have a part to build a safer crypto ecosystem. Livecoin proposes a detailed, actionable framework guidelines for all centralized exchanges to raise the bar on safety, transparency, and trust for the entire industry<\/p>\n\n\n\n
To build user and regulator trust, the crypto industry\u2019s centralized players must embrace a new approach to the transparency of user funds.<\/p>\n\n\n\n
Users can only trust a digital asset platform if they know they are protected. The security of users and their funds is a core component of Livecoin\u2019s ethos, baked into the design of each product and feature we introduce.<\/p>\n\n\n\n
Complying with existing regulations and contributing to the creation of new regulatory frameworks that enable financial innovation while protecting users are among Livecoin\u2019s top priorities.<\/p>\n\n\n\n
Exchanges must be risk averse with user funds. Customer
assets should never be used in any other way than what the
customer consents to under the terms of specific products.<\/p>\n\n\n\n
Centralized exchanges must allow users the freedom to
choose where to store their digital assets, depending on their
unique needs, trading habits and independent risk evaluation
of the various solutions available. Depositing and withdrawing
crypto assets into\/from the exchange for the purpose of
trading should be a simple, cost-efficient and seamless
process.<\/p>\n\n\n\n
Centralized exchanges must adopt the highest security
standard solutions for the storage of customer assets to
protect them from cyber threats.<\/p>\n<\/div>\n<\/div>\n\n\n\n
Users have the right to verify the safekeeping of their assets
held in a CEX\u2019s custody, through proof of reserves or similar
disclosures.<\/p>\n\n\n\n
The disclosure method used must be technically adequate,
updated on a regular basis and based on reliable technology
that cannot be falsified (such as zk-SNARKs).<\/p>\n<\/div>\n<\/div>\n\n\n\n
Efficient use of capital is critical for CEXs. The risks of using
debt to fund growth are exacerbated by crypto\u2019s volatility, and
companies are urged to maintain a conservative capital
structure.<\/p>\n\n\n\n
Wrapped tokens offered by a CEX for use on a different
blockchain must always be collateralized 1:1 on their native blockchain.<\/p>\n\n\n\n
The collateral reserves must be publicly visible to and
verifiable by the community.<\/p>\n\n\n\n
CEXs have a critical responsibility to implement a strict
governance process for admitting crypto assets to trading on
their platforms to protect users from low credibility projects
with little or no utility.<\/p>\n\n\n\n
Centralized Exchanges should establish a reserve to act as a
safety net in situations such as a security breach.<\/p>\n\n\n\n
All exchanges must dedicate significant resources to provide
their users with sufficient knowledge about their products,
services and the broader industry.<\/p>\n\n\n\n
Materials should clearly explain the risks associated to
enable users to make informed choices.<\/p>\n\n\n\n
CEXs that offer loan or margin\/leveraged products should
ensure that these are appropriately collateralized.<\/p>\n<\/div>\n<\/div>\n\n\n\n
Exchange operations must be transparent. Users have the right to verify the
safekeeping of their assets held in a centralized exchange\u2019s custody.<\/p>\n\n\n\n
Luckily, technology has made innovative solutions possible.
Below are some guidelines on how the desired transparency
can be achieved for CEX users to ensure their assets are
collateralized, exist on the blockchain and are under the
control of the exchange at the reporting date.<\/p>\n\n\n\n
CEXs should publish a proof of reserves tool based on Merkle
tree and zk-SNARKs technologies.<\/p>\n\n\n\n
Combining zk-SNARKs and Merkle tree proof gives users a
new and improved way of verifying the safekeeping of their
assets. Specifically, using zk-SNARKs allows users to check
that each account\u2019s total net balance is non-negative and that
all user assets are part of a CEX\u2019s claimed total net balance of
user assets \u2013 in a private and secure manner.<\/p>\n\n\n\n
zk-SNARKs provide the technology needed to ensure both
data integrity and privacy at the same time. Its application for
proving reserves and increasing CEX transparency should
help build trust in the blockchain industry. For many, a
development like this has been long awaited and comes at a
pivotal time for CEXs.<\/p>\n<\/div>\n<\/div>\n\n\n\n
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