The cryptocurrency ecosystem—known for rapid innovation—is not immune to scandals and controversy. Financial collapses, high-profile bankruptcies, and opaque practices by certain players have highlighted the need for regulatory and transparency mechanisms. In this context, the role of Digital Asset Service Providers (PSAN), proof of reserves, and collateral becomes crucial to rebuild trust and keep the market stable.

The importance of PSANs in the crypto ecosystem

PSANs, defined by European and French regulation, play a central role in supervising digital assets. They provide services such as custody, exchange, transfer, and portfolio management of cryptocurrencies on behalf of clients. Under regulation 2020-05, PSANs must register with the AMF, ensuring a minimum level of compliance—especially regarding anti-money laundering and counter-terrorist financing.

Proof of reserves: a crucial transparency mechanism

Proof of reserves is an accounting practice where crypto companies demonstrate they have sufficient reserves to cover client assets. It verifies the alignment between assets held and liabilities owed to clients, offering the transparency needed to build trust. In a sector prone to bankruptcies and misuse, proof of reserves is a vital governance tool.

Collateral: a tool for financial stability

Collateral—assets pledged as security in crypto transactions—is another key component of financial safety. It protects parties involved in trades or loans from default and market volatility. Implementing efficient, transparent collateral-management systems is imperative to mitigate the risks associated with crypto operations.

Conclusion

In the ever-changing world of cryptocurrencies, trust and stability are fundamental pillars. PSANs, by complying with regulations, provide a necessary security framework. Proof of reserves and collateral complement this framework by reinforcing transparency and accountability. Together, these elements help prevent scandals and controversies while enabling firms to navigate the complex, fast-moving crypto landscape.