Key Highlights:
- Gate has introduced a new security metric called Proof of Storage and Execution Control (PoSEC) to demonstrate how reserve assets are protected against hot wallet breaches.
- The exchange reported $8.69 billion in total reserves—representing 118.49% of customer deposits—with cold storage coverage alone standing at 104.58%.
- Reserve holdings are undergoing an independent audit and include traditional assets such as stocks and U.S. Treasuries held under independent custody.
Cryptocurrency exchange Gate is expanding traditional exchange transparency standards by introducing a new framework aimed at verifying asset protection mechanisms in addition to balance sheet solvency. While standard industry audits typically focus on whether an exchange holds sufficient tokens to back user deposits, Gate’s updated approach examines the resilience of its custody systems in worst-case security failure scenarios.
Proof of Reserves (PoR) shows the assets exist, and PoSEC shows how they’re stored and whether they’re protected,
Han said.
Cold Storage Ratios and Asset Breakdown
Major digital asset platforms such as Binance, Kraken, and OKX routinely publish Proof of Reserves reports confirming that their on-chain assets match or exceed customer liabilities. Gate’s model seeks to advance this concept by evaluating whether user balances remain fully backed by offline assets even if its internet-connected hot wallets were compromised or drained by attackers.
According to Gate, the platform currently maintains a cold storage coverage ratio of 104.58%. The exchange distributes its holdings across offline and online environments, keeping 88.26% of all assets secured in cold storage and allocating the remaining 11.74% to active hot wallets. Overall, Gate stated that its latest reserves reached $8.69 billion, an amount equivalent to 118.49% of total customer liabilities.
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Our hot wallet exposure is covered by our excess reserves, the amount we hold above user assets,
he said.
Audits and Non-Crypto Reserve Assets
Han confirmed that the reported reserve metrics are actively undergoing an independent third-party audit to verify the exchange’s claims. Notably, the cold-storage backing is not limited exclusively to native digital tokens; Gate’s offline reserves also comprise traditional financial instruments, including equities and U.S. Treasuries managed under independent custody arrangements.
The roll-out of this security measurement follows Gate’s recent brand repositioning around Gate Money, an all-in-one financial application integrating digital currency trading with yield-generating savings products, asset conversions, and payment card services. With a registered user base exceeding 60 million, the exchange aims to attract retail users outside the conventional crypto trading sphere. As Han previously noted regarding the platform’s broader retail push, We want to provide this product to a wider range of customers,
he said.
Why This Matters
The collapse of multiple centralized platforms in recent years accelerated the mainstream adoption of Proof of Reserves among centralized exchanges. However, standard reserve attestations often fall short of detailing execution risks or revealing whether customer deposits rely on vulnerable, internet-connected infrastructure. By tying custody segregation directly to overall reserve health, Gate’s introduction of PoSEC highlights a developing shift toward multi-layer transparency—where exchanges must verify not just balance sheets, but also physical custody distribution, independent custody of traditional financial assets, and operational resilience against hot wallet exploitation.
Frequently Asked Questions
What is Gate’s PoSEC framework?
PoSEC (Proof of Storage and Execution Control) is a transparency metric designed by Gate to measure how assets are secured across its infrastructure, specifically demonstrating whether offline cold storage alone is sufficient to protect and cover all user balances in the event that hot wallets are compromised.
What percentage of customer assets does Gate hold in reserve?
Gate reported holding $8.69 billion in total reserves, which accounts for 118.49% of customer assets. Of these total reserves, 88.26% are kept in offline cold storage (providing 104.58% coverage of customer deposits), while 11.74% remain in hot wallets.
Are Gate’s reserve figures independently verified?
Yes. According to Han, the reported reserve numbers are currently undergoing an independent audit. Furthermore, components of the cold storage holdings, such as stocks and U.S. Treasuries, are maintained under independent third-party custody.
