CheckSig and Bank of Italy

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CheckSig was chosen during the 2022-2023 Call for Proposals by Milano Hub, the innovation center of the Bank of Italy

The selection process, which included 81 participants, focused on the applications of Distributed Ledger Technology (DLT) in banking, finance, insurance, and payment services. Among the selected projects was CheckSig’s Individual Proof-of-Reserves (iPoR) initiative, aimed at developing new transparency standards to protect cryptocurrency investors.

The Individual Proof-of-Reserves project is designed to enhance transparency on crypto custodians’ solvency, benefiting both end investors and regulatory authorities. CheckSig is committed to responsible innovation and views Proof-of-Reserves as a cornerstone of trust in the crypto space, poised to become an industry standard. Collaboration with the Bank of Italy has been a key driver of the project’s success, benefiting investors, entrepreneurs, and the broader national financial ecosystem.

Since 2020, CheckSig has been the first entity globally to publicly offer omnibus Proof-of-Reserves (PoR) for all assets under custody. While some international exchanges have followed suit, CheckSig remains the only custodian providing this service. By leveraging blockchain’s inherent transparency, CheckSig demonstrates full control of entrusted assets monthly, ensuring that these assets are neither lost nor lent to third parties—a practice often linked to crypto fraud.

With the support of the Bank of Italy, CheckSig refined its technology and processes to transition from cumulative to Individual Proof-of-Reserves (PoR). This individual-level PoR enables investors to independently verify the integrity of their assets across various intermediaries, including exchanges, banks, and other entities. Auditors and regulatory authorities can also leverage this capability for more accurate periodic checks, significantly enhancing transparency within the cryptocurrency sector.

The Bank of Italy assembled a dedicated team of experts to support CheckSig in the design phase of these new processes. The project was implemented during Q3 and Q4 of 2023, with multiple collaborative sessions involving the Bank of Italy team and further experimentation with selected Italian financial institutions.