---
title: Proof of Reserves
url: "https://www.unknowngravity.com/en/glosario/proof-of-reserves"
site: Unknown Gravity
published: "2026-09-21T11:55:13+00:00"
modified: "2026-09-21T11:55:14+00:00"
language: en-US
description: "Proof of reserves is how an exchange, custodian or stablecoin issuer demonstrates that it really holds the assets it claims to hold: it publishes cryptographic proofs of its balances so that anyone…"
section: "Home > Proof of Reserves"
---

# Proof of Reserves

GLOSSARY · BLOCKCHAIN & WEB3

What proof of reserves is: how a custodian or issuer cryptographically demonstrates that it backs its clients' balances, and the limits of the method.

WHAT IS IT? · FOR DUMMIES

**Proof of reserves** is how an exchange, custodian or stablecoin issuer demonstrates that it really holds the assets it claims to hold: it publishes cryptographic proofs of its balances so that anyone can verify them. It was born from an expensive lesson: promises of solvency without proof are worth nothing.

WHAT IS IT? · PRO

A serious proof of reserves combines proof of assets (verifiable addresses or a third-party attestation) with proof of liabilities — typically a Merkle tree of client balances that lets each user check that their balance is included without exposing the rest. Without the liabilities leg, the proof is decorative: showing funds says nothing about how much is owed.

Its limits matter: it is a snapshot, it does not watch off-chain liabilities or hidden loans, and it does not replace the audit and regulated segregation that MiCA requires of custodians and issuers — the standard we describe in [crypto-asset custody](/en/articulos/crypto-asset-custody) and in the [euro stablecoin](/en/articulos/euro-stablecoin-mica).

## 01 / Key points

- Cryptographic proof that a custodian/issuer backs client balances
- Complete: verifiable assets + liabilities in a Merkle tree
- A snapshot: it does not detect hidden off-chain debts
- Complements — does not replace — regulated audit and segregation

## 02 / Advantages

- Verifiable by anyone, including each client
- Market discipline: whoever does not publish it says something
- Cheap to verify compared with a full audit

## 03 / Disadvantages

- A snapshot, manipulable with funds borrowed that day
- Does not cover hidden off-chain liabilities
- False sense of security if read as an audit

This entry is informative. It is not legal, tax or investment advice. The rules cited change: check the current version on [BOE](https://www.boe.es) and [EUR-Lex](https://eur-lex.europa.eu).