Sunday, November 8, 2026
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The Crypto Economy

Money, markets and payments, explained without the hype

Proof of reserves

Proof of reserves is a check, usually run by a crypto exchange with an outside firm, showing that wallets the exchange controls held at least as much of each covered coin as its customers' balances added up to at one moment. Customers can confirm that their own balance was counted by finding it in a cryptographic list of all balances called a Merkle tree.

Glossary Updated

Two exchanges, two snapshots

How fresh is the proof your exchange shows? Take exchange Kraken. Its proof of reserves page, checked on November 8, 2026, still showed a snapshot taken on June 30, which by then was 131 days old. The report summary behind it puts the moment at 11:59 pm UTC, at bitcoin block 956,140, and names The Network Firm LLP as the attestation provider.

Exchange Snapshot Bitcoin reserve ratio Stablecoins
Kraken June 30, 2026, 23:59 UTC 102.9% USDC, USDT and USDG at “105%+”
Binance November 4, 2026, 00:00 UTC 100.03% USDT at 101.55%, USDC at 103.12%

Exchange Binance’s own page is newer. It dates its snapshot 04/11/26 at bitcoin block 974,457, which block explorer mempool.space shows was mined at 23:53 UTC on November 3, so the date means November 4. Binance lists 685,732.066 BTC in its on-chain wallets against 685,523.923 BTC of net customer balances, a cushion of about 208 BTC.

How the check works

Kraken’s FAQ sets out the steps. First an independent accountant copies every client balance, anonymized, into a Merkle tree, and its root becomes one code that identifies that exact set of balances. Kraken then produces digital signatures proving it owns its on-chain addresses. Finally the accountant adds up what those addresses hold and sets the sum against the client total.

Clients can test their own line, and in Kraken Pro the check sits under the account icon, then Proof of Reserves, where a client picks a review date and clicks “Verify yourself”. The first 16 characters of the Merkle Leaf ID can then be pasted into the accountant’s tool.

Binance puts its lookup under Wallet, then Verification. The page labels the snapshot “Audit Time” and names zk-SNARKs, a type of cryptographic proof, as its method.

What it cannot show

Kraken lists the gaps itself. Its page says the procedure “cannot identify any hidden encumbrances or prove that funds had not been borrowed for purposes of passing the review”, and adds that keys may have been lost or funds stolen since the last review.

Dollar balances sit outside it too, because Kraken notes that “USD is not an in-scope asset for this review”.

The common mistake is reading a ratio above 100% as a clean bill of health. In March 2023, staff at the Public Company Accounting Oversight Board published an investor advisory saying such engagements “are not audits”. Their procedures, it added, likely do not address the exchange’s liabilities. The advisory gives the staff’s view, not a Board rule.

Issuers of stablecoins publish something else. Their reserve attestation sets reserves against the tokens in circulation. With an exchange, a ratio means little until you know when the snapshot was taken, which coins it covered and who signed it.