Do Crypto Exchange Reserves Overly Rely on Their Own Tokens?

Crypto exchange reserves have been cast into the spotlight following the FTX collapse. The composition of those reserves has also come into question.

Crypto exchanges have been clamoring to release their reserves data. But like most things in the industry, there are a lot of discrepancies between them.

FTX and Alameda relied too heavily on their own FTT token, which ultimately catalyzed its demise.

Crypto trader John Brown looked into various crypto exchanges’ reserves. What he found was quite a surprise, to say the least.

Reserves Reliance on Native Tokens

The analyst used CryptoQuant data to reveal that Bitfinex had the most Bitcoin and Ethereum reserves. More than 90% of the reserve assets held on the exchange are in BTC and ETH.

However, CoinMarketCap (which is owned by Binance) reports slightly different figures. In its newly launched exchange reserves feature, CMC reports that Bitfinex has $7.6 billion in reserves. Instead of 90% BTC and ETH, it reports that 35% is its own LEO token and just 58% in the top two crypto assets.

Brown’s data revealed that had 52% reserves in BTC and ETH. However, CMC reports just 37% in the top two and almost 20% in SHIB. The exchange’s own CRO token tanked on reports that its reserves were heavy on illiquid tokens such as Shiba Inu.

OKX was ranked third for BTC and ETH reserves at 45%, according to Brown’s data. CMC’s figures match this with 25% BTC, 20% ETH, and 48.5% in USDT reserves for OKX.

The big discrepancy was with the world’s biggest exchange, Binance. According to CryptoQuant data, it has just 15% of its reserves in the top two. Binance’s CMC reports just 21.5% of its reserves in BTC and ETH.

Around 41.5% of Binance reserves are in its own BUSD stablecoin and its native BNB coin. However, BUSD is independently issued by Paxos, a fully regulated stablecoin issuer, according to Changpeng Zhao.

As reported by BeInCrypto earlier this month, Binance reserves include around $40 billion in stablecoins (BUSD and USDT).

Coinbase Crypto Reserves Revealed

Coinbase’s reserve breakdown has just been released. On Nov. 23, CEO Brian Armstrong revealed that Coinbase holds around 2 million BTC worth approximately $33 billion at current prices.

Coinbase does not have a native exchange token, so at least those fears can be alleviated for this exchange.


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