The Public Company Accounting Oversight Board (PCAOB) – a U.S. watchdog funded by the industry and working under the direction of the Securities and Exchange Commission – has issued a warning about the trustworthiness of the reserve reports that are routinely presented by cryptocurrency firms. According to the organization, these reports, which are intended to prove that customers’ financial transactions are safe, cannot be relied upon.
The board explained that these reports do not meet any established standard, and are not the same as audits. Furthermore, the documents do not address any liabilities the company may have, or the rights of digital asset holders, and they cannot demonstrate anything about the company’s internal controls or governance.
The PCAOB strongly advised customers to be cautious when relying on these reports, emphasizing that they are “inherently limited.” The organization stated that customers should not assume that there are enough assets to cover the liabilities, even if the reserve report appears to show this.
