Bitcoin Exchanges Combatting Solvency

In the legitimate space, we see movement towards self-imposed bitcoin financial audits and process audits.

In the legitimate space, we see movement towards self-imposed bitcoin financial audits (do you really have the funds you say you have) and process audits (do you do what you say and say what you do?). This is the only industry I know where companies are begging to pay money be audited; yet the auditors are hesitant as they don’t yet have the right tools to perform robust audits. As the market matures, there will be demand for recognized standard audits such as SAS70 and its successor ISAE3402.

We also see evidence that larger investors look to work with companies who can demonstrate levels of signoffs and approvals before significant transactions like withdrawals or code changes. On the tech side, this means peer code reviews, independent testing, segregated environments, and documented approvals and sign offs. On the financial side, this means maker and approver for payments.

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Currently there is no formal custody or ‘trust’ concept for Bitcoin companies. There may be no protection should your exchange or wallet fail. At itBit we do not have a ‘hot’ (online) wallet because we store bitcoin offline, so in the debate of security versus convenience, our clients are happy to forgo instant access to funds to gain the security that comes from keeping the funds beyond the reach of online hackers.

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