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After the spectacular implosion of the FTX crypto exchange, regulatory authorities have been sharpening their weapons because the exchange misused customer funds and its aftermath has disrupted the entire industry.
Regulatory authorities are already working on new rules for controlling crypto exchanges, including those in the UK, the European Union (EU), and more.
As far as crypto exchanges themselves are concerned, they are now aware of how important their own compliance as well as users’ security and trust has become.
Protection fund
Crypto derivatives trading platform known as Bitget has about eight million users and has introduced extensive measures for risk mitigation to retain its clients and attract new ones.
The measures are aimed at ensuring transparency and compliance. An auditable protection fund worth $300 million has been rolled out by the company, which is quite rare in the crypto space.
In order to reassure regulators as well as its users, Bitget has also introduced a Fund Custody service and has offered proof of reserves too.
Launched in 2018, Bitget is located in Singapore and offers innovations and features including spot and social trading. Its average trading volume is about $10 billion a day.
The details
The protection fund that the platform has introduced is mostly made up of Bitcoin (BTC), but it does have some small quantities of Ethereum (ETH) and the USDT stablecoin.
The purpose of the fund is to safeguard against theft, hacks, and other risks to the digital assets that are stored on the platform.
Bitget has wallet addresses that are publicly accessible and has stated that the digital assets in the protection fund will not be touched for a minimum of three years.
The company recently bolstered the fund, which has seen its value touch $300 million, and the assets are distributed across seven wallet addresses, which it has made public for ensuring transparency.
Transparency and trust
Gracy Chen, the managing director of Bitget, said back in November that their goal was to bolster user confidence in the platform.
The Fund Custody service was rolled out this month and it allows users of the platform with assets of more than 100,000 USDT to get a separate custodial wallet.
This wallet is not part of the main reserve and has a dedicated address that users can check and use for withdrawing funds.
The purpose is to ensure that client funds are not affected in case the exchange experiences a bank run or a hack.
Chen also stated that Bitget would improve transparency through the measures being taken by CEX. These include publishing its Merkle Tree proof of reserves for promoting transparency and auditing.
The purpose of proof of reserves is to ensure that a trading platform has maintained a 1:1 ratio in terms of the digital assets that it stores on behalf of its clients and can fulfill its promises.
The platform uses both cold and hot wallets, along with Zero Trust Security Architecture and industry-grade protection for ensuring that user funds are kept in a secure manner.
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