After the liquidity calamity and acquisition of crypto exchange FTX, Binance CEO Changpeng Zhao revealed the commencement of a Proof-of-Reserves audit system to enable its digital asset holdings verification.

Specifically, via a Nov. 8 Twitter post, Zhao reportedly shared his promist for the implementation of a Proof-of-Reserve mechanism at Binance to offer “full transparency” via utilizing Merkle Trees – a data structure aimed at encoding blockchain data with enhanced efficiency and security.

A Proof-of-Reserve audit, by standard procedure, is carried out by an independent third party to make sure the custodian’s assets are owned as claimed.

The Binance CEO’s plan for implementation of Proof-of-Reserves reportedly surfaces not long following Binance’s finalizing its decision to complete the acquisition of rival cryptocurrency exchange FTX on Nov. 8, who’s been rumored to be on the brink of its financial downfall regardless of CEO Sam Bankman-Fried’s initial dismission of the claims.

Current Head of Chainlink Sergey Nazarov reportedly shared his perspectives in a Nov. 8 tweet that a cryptographic-dependent Proof-of-Reserves mechanism could offer a clearer view for investors regarding the solvency situation of a trading venue or financial entity, and “is becoming the new industry standard.”

Also, top-tier crypto exchange Kraken has already carried out the implementation of its “advanced cryptographic accounting procedure” to make it possible for users to run verification for their token balances since Feb. this year.

Crypto exchange OKX further issued an official announcement detailing its plans to introduce a Merkle tree-based Proof-of-Reserves audit system in a Nov. 8 Twitter post  – a tool that they believe to become an “important step” in establishing a “baseline trust” in the industry.