The amount of Bitcoin held on exchanges has fallen sharply after the collapse of crypto exchange FTX.
According to data from Santiment, only 6.95% of Bitcoin is currently held on exchanges. This marks the first time this metric has fallen below 7% since Nov. 24, 2018.
Santiment noted that there had already been a gradual shift towards self-custody since the Black Thursday market crash in March 2020, but the pace at which coins moved off exchanges accelerated after FTX went under.
The wavered trust in centralized parties has led to a movement among some exchanges to increase transparency by publishing a Proof-of-Reserves statement. Essentially, the PoR will document the exchange’s reserve asset allocation to prove it has the funds to cover users’ assets on a 1:1 basis.
On Nov. 25, Binance released its first PoR statement, showing the state of its Bitcoin reserves. The exchange claims to have an on-chain reserve of 582,485 BTC with a reserve ratio of 101%.
Kraken co-founder Jesse Powell questioned the authenticity of Binance’s PoR, saying a statement of assets is pointless without showing liabilities.
Binance CEO Changpeng Zhao responded to Powell’s statements, clarifying that third-party auditors would verify that no negative balances would be reflected in the PoR. Zhao said the PoR statement posted on Friday was an “incremental step” due to bottlenecks from its auditors.