Merkle Tree
Proof of Reserves

Companies that hold digital assets on behalf of users and track customer balances on their internal database can leverage PoR to create customer transparency to total reserves vs. customer liebilities. Typically, a Merkle Tree Proof of Reserves is well suited for the needs of the following business types:

• Exchanges: whereby a platform operator provides custody for customers to facilitate trading, staking and other activities.

• Custodians: whereby a platform operator provides custody for customers the primary purpose of securing digital assets.

The standard timeline to complete the first report is 3 to 4 weeks once engagement starts. Subsequent reports are typically completed more quickly, with reporting available to customers 10-14 days after the “snapshot” date.

• Generally speaking, yes. The Network Firm’s reporting is an “Attestation” report issued under AICPA standards, as required by Texas’ PoR law.

• Of course, the Texas Department of Banking has ultimate authority to decide whether any company’s reporting is sufficient to meet the regulatory requirements of the Section 160.

• Therefore, any prospective TNF client should reach out to Texas DoB regulatory staff and ask whether such reporting for their company would be sufficient to meet the PoR requirement.

• Generally, yes. While the Dubai authorities are currently assessing company PoR reporting under the VARA rules, TNF’s reporting in independent accountant’s attest reporting that would provide a higher form of proof than management reporting alone.

• The VARA regs are not highly prescriptive on the topic of PoR compliance, providing “ In addition to the Reserve Assets requirements in the Company Rulebook, VASPs shall comply with all requirements stipulated by VARA from time to time, including as part of a VASP’s licensing process, in order to demonstrate that assets held in reserve cover all of their liabilities with respect to Client VAs.”

• Therefore, any prospective TNF client should reach out to Dubai regulatory staff and ask whether such reporting for their company would be sufficient to meet the PoR requirement.

Its easy! TNF utilizes the market-leading technology, LedgerLens, to deploy Proof of Reserves widgets in a secure and highly-available manner.

• Just insert a single line of code within your website.

• Choose to add your widget to your public-facing site, or behind your customer log in.

• Our widgets have been deployed and operating for years. No downtime, no security issues, and no need to maintain staff to code and maintain your PoR customer verification tools.

No. To date, no exchange service provider has offered customers a real-time view to reserve assets and corresponding customer liabilities.

• TNF’s attestation service is “traditional” in this sense. The Proof of Reserves Report and Merkle Tree are published on a periodic basis, and “as of” a point in time.

• The reporting frequency can be monthly, quarterly or semi-annual.

• To explore our Real-Time Reserves Service, please view our Real-Time Reserves services page.

The PoR reporting frequency is often driven by a regulatory requirement and/or desire for enhanced customer transparency.

• The reporting frequency can be monthly, quarterly or semi-annual.

TNF is a lead author on the most comprehensive guide to Proof of Reserves in the world.

• We encourage all to read and understand the details of Proof of Reserves, Auditor-Attested Proof of Reserves, as well as the technical details of customer verification using Merkle Tree cryptography.

• Download: The Practitioner’s Guide to Proof of Reserves

• Yes! TNF has a global view regarding the needs of Digital Assets Service Providers. We service U.S. and non-U.S. companies.