HodlX guest post Submit your contribution
With the widespread adoption of Software as a Service (SaaS) and cloud applications, the need for third party security for such systems and outsourced functions has increased. Although blockchain technology offers inherent security, there are many cases where applications of this technology also require third-party assurance using blockchain SoC2 compliance services.
What are Blockchain SoC2 Monitoring Services?
The full form of SoC is System and Organized Controls. There are two main types of SoC audit reportsSoC1, which is about money and SoC2, which is about security. Strict government certification criteria govern all types of SOC reports. Only accredited accounting firms are allowed to issue them and they are only allowed to be distributed to a small collection of intended users. Here in this article we are going to talk about the second type of SoC exam, which is specifically applied to blockchain technology.
When it comes to distributed ledgers for blockchain technology and cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) that are not regulated by the government or a centralized agency, they are prone to trust issues for the general public. There are several ways in which blockchain ensures trustworthiness –The security of the protocol itself, the hashed anonymity of the users, the underlying cryptographic algorithms, etc. However, trusted peer-to-peer cryptoeconomy still requires trusted advisers, trusted intermediaries, and third party guarantees.
The circumstances that certainly require Blockchain SoC2 compliance services
In many cases, the SoC exam, especially the SoC2 exam and compliance, is certainly essential.
Subscribers to the Fund may request confirmation of the business process and general IT controls for the company’s digital assets to ensure that investor contributions are properly controlled and segregated, accounts are reconciled regularly, investor reporting is complete and accurate, and IT -Environmental adequate consideration of risks arising from inappropriate logical access, physical access, change management, etc. A regular blockchain report on Soc2 audit services convinces subscribers that the mentioned matters are safe and therefore their investments in the company are safe.
Asset-backed token is an umbrella term that includes various stablecoins and related creations of cryptocurrency. The most common are fiat-backed stablecoins, which are tokens that are issued (“minted”) on a specific public blockchain or 1: 1 from a fiat currency such as the US dollar, British pound or Japanese yen get supported. Tokens that are pegged to another currency (digital or fiat), pegged to a basket of securities, pegged to other assets, or backed by bonds or other financial instruments are the more complicated cryptographic creations.
So there are a multitude of places where trusted intermediaries, trustees, appraisers and auditors can play a key role in this often complex and fascinating area. There are many situations where this becomes a problem. Secured tokens are a good example. Buyers and holders of these secured tokens require third party confirmation of the effectiveness of the collateral, the underlying revenue streams, the collateral risk profile, and much more. Therefore, it is possible that they request a blockchain document for SoC2 compliance services.
Crypto accounting solutions
Since all existing crypto accounting software offerings are provided as SaaS, the most important considerations for user entities are ensuring the protection and functionality of the platform, as well as control over the confidential data it contains. SoC reports are considered a valid representation of customer trust. However, there are also a number of special considerations for crypto accounting solutions. Most of these offerings have third-party Exchange integrations, as well as custody and non-custody wallets. Hence, the main concern for consumers is how they can rely on the technology and automated controls that enable blockchain data to be translated and used for the application. Another factor is which controls (if any) confirm that complete and reliable information is efficiently provided through integration with third-party interchange data. In the situation where you are offering a crypto accounting solution, a blockchain report on SoC2 compliance services is essential.
Eligible blockchain platforms and mappings
Authorized or “private” blockchains can solve many business problems in a powerful way by improving supply chain productivity, providing transparency about the origin of the products used in manufacturing, and providing a trusted identity, among other things. In fact, some of the world’s largest companies, such as American multinational investment bank Goldman Sachs, have experimented with blockchain technologies, and there are already several successful applications.
A coalition of companies, not just a unit, is included in a variety of current implementations. The need for third party verification in a blockchain consortium is pretty clear. SoC1 and SoC2 reports are very effective in adding confidence and security to a consortium of private participants on the network. However, an adjustment to the existing standard or at least a novel approach by the auditor may be required to use SoC reporting to ensure such security.
In particular, the requirements of SoC1 and SoC2 depend on a clear demarcation between service organizations and user entities in which an outsourced role for the user agency has been taken over by the service organization. Compare this to a blockchain consortium where participants did not outsource their cohorts to a function, but instead changed the way they trusted, processed, and reported transactions among members.
There is a dominant member in several blockchain business consortia (e.g. the Walmart Supply Chain Consortium). In a more even stance, some participants have. In the case of a leading or dominant participant, entry, consensus, change management, and other elements of the blockchain ecosystem would likely be controlled by the dominant participant. The problems of regulating the ecosystem are likely to be more nuanced in fairer blockchain consortia and will likely require trustworthy intermediaries and auditors.
Examples of trusted intermediaries for auditors and consultants, likely through SoC reporting, include confirmation of the existence and valuation of real-world assets represented on approved blockchains, consensus checking mechanisms, correcting false ledger entries, and accounting controls for private blockchains that the Use monitoring or payment token.
In the end, even the authorized block needs blockchain SoC2 monitoring services. There are several possible SoC implementations and comparable audit reviews to ensure the necessary security for approved blockchain consortia and their members.
Exchanges and wallet providers
Third party warranty is critical in depot environments. Some major exchanges recently announced that their SoC audits have been completed, and others will follow shortly. This will soon be standard practice for all centralized exchanges.
Large financial institutions are also starting out with “institutional custody solutions” that offer institutional Bitcoin investors the highest possible level of protection for their digital assets.
All of this just means that a blockchain report from SoC2 Compliance Services is essential if the virtual currency exchange or custody solution you are using contains a custody exchange function. “Institutional grade” custody solution providers are likely to be asked for reports on SoC1 and / or SoC2.
Taking away the whole story is:Blockchains and crypto are deeply based on the assumption that the technology’s built-in crypto algorithms provide the confidence it needs. A number of practical examples as well as emerging and theoretical use cases include human interventions, regardless of whether the human is acting as an oracle to ensure data consistency in practice with data that has been inserted into a blockchain, or as a reviewer, valuing secured sources of income for an asset. secured token. In the case of human interference, a clear assurance from third parties in the form of blockchain SoC2 auditing services becomes important.
Adam Mazzocchetti is a blockchain security specialist who has researched, advised, and audited blockchain security systems for the past five years. He has degrees in cybersecurity and behavioral psychology. Adam is also a certified blockchain security expert, certified ethical hacker, and CompTIA Security + certified. Reach him Here.
Featured image: Shutterstock / Chinnapong