Cryptocurrency investment product provider Grayscale Investments has declined to provide on-chain proofs of reserves or wallet addresses that reveal the underlying assets of its digital currency products, citing “security concerns.”
Grayscale added: "We know the former point in particular will disappoint some, but the panic sparked by others is not sufficient reason to circumvent the complex security arrangements that have kept our investors' assets safe for years."
Grayscale’s move comes amid growing pressure on crypto businesses to introduce proof-of-reserves following FTX’s liquidity problems and subsequent bankruptcy.
Grayscale shared a letter co-signed by Coinbase CFO Alesia Haas and Coinbase Custody CEO Aaron Schnarch that breaks down Grayscale's holdings by its investment products and reiterated that the assets "are safe," with each product Each has its "own address on the chain" and the cryptocurrency is always an "applicable grayscale product".
Grayscale added that each of its products is set up as a separate legal entity and that "laws, regulations and documents prohibit the digital assets underlying the products from being lent, borrowed or otherwise collateralized."
