von • Binance has released a policy paper proposing guidelines for centralized exchanges (CEXs) to foster industry transparency, trust, and safety.
• The proposal includes measures such as preventing unauthorized use of customer assets, building secure custody solutions, implementing disclosure methods like proof of reserves and more.
• Binance has also urged crypto companies to practice proper risk management in order to protect their customers.
Binance Proposes Transparency Framework for CEXs
Binance has released a policy paper with a detailed framework of guidelines that centralized exchanges (CEXs) could follow to foster industry transparency, trust, and safety. This comes in response to the numerous dark events that have dented the image of the cryptocurrency space in the past year such as FTX collapse and other high-profile bankruptcies.
Preventing Unauthorized Use Of Customer Assets
In order to promote trust and safety among its users, Binance has called on crypto market participants to take measures such as preventing unauthorized use of customer funds and building secure crypto custody solutions that facilitate seamless depositing and withdrawal of funds.
Fostering Transparency Through Disclosure Methods
Binance is also proposing that exchanges employ robust disclosure methods such as proof of reserves so that customers can verify the safety of their crypto assets under custody. The exchange recommends using reliable technologies such as zk-SNARKs which cannot be falsified.
Practicing Proper Risk Management
Furthermore, Binance is calling on crypto companies to practice proper risk management by refraining from running their operations with borrowed funds, creating user protection funds, properly collateralizing loans etc., all in an effort to protect their customers from unforeseen circumstances like heists.
Conclusion
The cryptocurrency space needs rebuilding user and regulator trust in order for it to grow further into the future; hence this proposed framework from Binance is essential for instilling confidence back into the sector
