"In a nutshell, the problem for users of centralized digital asset exchanges — as well as custodians, loan platforms and other 'service providers' that custody digital assets on behalf of their users — is that they are required to place great trust in the exchange without formalized and available mechanisms of trust and transparency.

Back-of-the-napkin calculations for the top 10 cryptocurrencies by market cap, assuming that exchanges hold a conservative 10% of those assets, would mean that exchanges currently custody about $16B-$20B worth of crypto. Again, with little to no meaningful transparency.

The solution: give exchanges a way to provide independent validation and proof that they have adequate reserves of a given digital asset to meet the 'IOUs' to their customers. We call it a 'proof of reserves assessment.'"