Binance, the largest crypto exchange in the world, has switched to a semi-automated process to improve the transparency of its reserve B-tokens. This comes after years of mismanagement, during which Bloomberg reported that Binance stored token collateral with user funds in the same wallet.
The exchange has now set up a partially-automated process that ensures the B-tokens are “always transparently backed.” This is achieved through a system that only allows minting of new coins to take place after collateral has been added to the appropriate wallet.
A Binance spokesperson said that the exchange has been moving the collateralized assets to dedicated wallets over the past few weeks. Each network now has its own wallet, which shows the 1:1 backing of each asset.
They added that the collateral has always been backing users’ B-token assets and has always been available for withdrawal at any time.
The move may be an effort to increase reserve transparency amid a regulatory crackdown on centralized exchanges. The semi-automated system might also enable Binance to intervene if an incident were to impact the B-token reserves.
However, Conor Ryder, a research analyst at blockchain data firm Kaiko, pointed out that the semi-automated system still requires trust in Binance’s management of the reserves.
He suggested that a fully automated process would be ideal to prevent any mismanagement in the future.
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