Bank of America Made a Statement Regarding The Reserve Evidence of Crypto Exchanges

Bank of America made a statement regarding the reserve evidence of Crypto exchanges. The cryptocurrency industry also needs a clear definition between the trading process and the sellers, the bank said.

Following the failure of FTX and Alameda Research, crypto trading platforms are rushing to prove that the client’s assets are safe and not used for speculation, but “proof of deposit, less in the proposed form , is not flawed to inspire confidence,” Bank of America (BAC) said in a research report Thursday. The bank said that many exchanges have declared, or are planning to declare, their assets through proof of deposit using Merkle trees. These are well-functioning data structures called “hash trees” that can be safely analyzed. They behave like a credit card and work even when the security is compromised.

In those mistakes, the property is displayed at a specific time, which allows for manipulation, such as renting the property shortly before the photo is taken, the note said. In addition, evidence of debt is required to determine the strength and security of assets, and the evidence of the reservation system is often based on third-party research institutions that can be replicated or “can be created by the platform business itself”. notes added. And, even if users find the compatibility is not working, there is no stop button. Stablecoin securities should be investigated and not just demonstrated. Stablecoins are a type of cryptocurrency whose value is linked to another asset such as the US dollar, and is the equivalent of money in the crypto world. Although it is not proof of fixed defects, the crypto industry also needs a clear definition between trading platforms and sellers, according to the report.

Bank of America also addressed the FTX incident

More importantly, it needs a law, the bank said, adding that FTX’s regulatory status in the Bahamas meant it was unclear whether founder and former CEO Sam Bankman-Fried broke any laws, since FTX no rules as a salesperson. Exchange volumes (DEX) are expected to continue until confidence is restored, the note adds. Bank of America.

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