Coinbase has introduced a Proof of Reserves (PoR) for its wrapped Bitcoin token, cbBTC, in response to growing concerns regarding transparency.
The purpose of this initiative is to reassure users that each cbBTC is fully backed by Bitcoin (BTC) held by the exchange at a ratio of 1:1.
According to the PoR data released by Coinbase, the exchange currently holds a reserve of 26,525.15 BTC, with a corresponding supply of 26,461.05 cbBTC tokens.
The breakdown of cbBTC distribution across different networks is as follows: Ethereum hosts 16,080 cbBTC, Base contains 7,655.391 cbBTC, Solana holds 2,673.489 cbBTC, and Arbitrum has 51.395 cbBTC.
In addition, Coinbase has disclosed specific Bitcoin addresses along with their balances to enhance transparency. The wallet with the largest portion of reserves contains 690 BTC, valued at around $65.8 million at current market rates. Furthermore, there are 40 wallets each holding 480.984 BTC, while the rest of the BTC is spread across various wallets.
This move by Coinbase follows criticisms from notable figures in the cryptocurrency space, such as Justin Sun, the founder of Tron. Sun had raised concerns about the lack of transparency and centralization of cbBTC, highlighting the absence of Proof of Reserve, lack of audits, and the potential for frozen balances. He cautioned that centralized control could lead to asset seizures in response to government interventions.
While the introduction of PoR for cbBTC signifies a step towards transparency, some user concerns persist. Recent incidents involving transaction delays on Solana (SOL) have raised questions about Coinbase's liquidity and operational practices, with users speculating that the exchange may be staking SOL without permission, causing transaction delays.
Despite Coinbase attributing the delays to technical and blockchain issues, users are calling for further evidence of liquidity and operational integrity. The broader crypto community continues to emphasize the importance of transparency and accountability from centralized exchanges.
Coinbase's effort to implement cbBTC Proof of Reserves is a positive move in rebuilding trust. However, continuous scrutiny highlights the need for users to remain vigilant in managing and securing their assets on such platforms.