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CertiK: Crypto exchanges should set hard USD holding limits for hot wallets

BlockBeats reported,November 10, that the CertiK research team said crypto exchanges should not rely solely on the proportion of assets held in cold wallets to assess security, but should also set clear USD holding limits for hot wallets. The recommendation came after a Binance hot wallet was attacked, prompting several exchanges to disclose their cold-wallet reserve ratios to bolster user confidence. Gate disclosed that 88.26%of its total assets were held in cold wallets, while Coinbase said more than 99%of its customer assets were offline.

The CertiK research team noted that the proportion held in cold storage can indicate the extent of assets' online exposure, but cannot serve as a security score on its own. Increasing the proportion held in cold wallets generally helps reduce online risk, but further increases may offer limited benefits when the proportion is already high. Overly rigid storage ratios can also slow withdrawals, force platforms to transfer assets hastily, and concentrate risk in key management systems.

CertiK recommends that exchanges set separate hot-wallet limits for each asset and blockchain, taking into account criteria: a proportion of customer liabilities, estimated withdrawal demand, and an absolute loss limit based on the platform's financial resources and ability to recover assets. The organization believes that platforms should maintain operational liquidity while limiting potential losses through hard USD limits and circuit breakers.

Original article link:https://m.theblockbeats.info/flash/376485