Proof of Reserves
Proof of Reserves is an auditing technique for crypto exchanges and other VASPs.
By using Proof of Reserves, an exchange can show how many assets it has at any time.
Proof of Reserves can be used
To prove customer deposits correspond with the crypto assets in custody.
An exchange can prove its asset reserves in various ways, such as
Merkle tree proofs,
Third-party audits, or
Separation of reserves into off-chain and on-chain, as seen in many blockchain analytics companies.