"So Who Audits the Code?"

The New Layer of Oversight

In recent weeks, we’ve talked about the transformation of trust in the financial system and the new infrastructure shaped by the “code + institution” balance.

I’ve been writing about this for four weeks now, this is my fifth piece, because I believe the merging of stablecoins and the seemingly unchangeable traditional financial infrastructure, starting with the tech-friendly payment systems, marks the beginning of a significant shift. The liquidity in this world is much more fluid, and when we look back, we might say that the foundation for moving traditional finance’s trust infrastructure onto blockchain was laid in 2025.

And if you don’t find these topics entertaining enough, just wait until you see this week’s article. 👀

This week, we’re diving into another fundamental building block of these merging systems: Regulations. 🥳🎉

And a key question: “Who audits the code?” 🤓

Blockchain was born from the idea of building trust without intermediaries. But today, with stablecoins and tokenized assets circulating globally and reaching more institutions and individuals, it’s become necessary for technological and regulatory oversight mechanisms to work together.

⚖️ Regulation: Rules Now on the Chain The European Union’s MiCA (Markets in Crypto-Assets) regulation became the first comprehensive regulation to provide a legal framework for stablecoin issuers. With MiCA, every stablecoin is required to have collateral (like cash or government bonds) and undergo regular independent audits.

Circle, a pioneer in this transparency approach, has created a model by documenting all USDC reserves with monthly Grant Thornton reports.

Similarly, Tether publicly shares its reports audited by BDO Global. So financial auditing is no longer just about checking financial statements, it’s also about how the code works and how the digital money is backed.

🧩 Auditing the Code: On-chain Transparency So who audits the code? In the blockchain world, this role is fulfilled by “Oracle” and “Proof of Reserve” mechanisms. Chainlink is an oracle network that verifies off-chain data and brings it onto the chain. This system ensures that smart contracts can reliably access real-world data (like the size of a stablecoin reserve or the price of a bond).

Moreover, the Chainlink Proof of Reserve model automatically audits whether the on-chain counterpart of any asset truly exists.

This approach doesn’t completely eliminate the role of traditional independent auditing firms but complements them. In other words, auditing now happens through data flow rather than documents or declarations.

🌐 Hybrid Models: Project Guardian and New Bank Experiments On the institutional side, auditing isn’t left solely to regulation or technology, it’s advancing at their intersection. Project Guardian, led by the Bank for International Settlements (BIS), offers a hybrid environment where central banks and major financial institutions test tokenized assets, stablecoins, and DeFi protocols.

The goal is to combine “institutional auditing” processes with on-chain auditing mechanisms. Similarly, J.P. Morgan’s Onyx initiative aims to create a transparent transaction ledger for both banks and regulators. Here, the principle of “trust but verify” evolves into “verify and trust.”

🔍 A New Auditing Culture: Code, Regulation, and Community All these developments usher in a new era where the concept of auditing is defined not only by financial reports but also by open-source code, on-chain data, and independent verification processes. Some projects even open up this auditing to the community through bug bounty programs that reward developers for finding security vulnerabilities. So now auditing;

is partly legal (like MiCA, IFRS, BDO),
partly technological (like Chainlink, Proof of Reserve),
and partly community-based (like bug bounties, open audits).

I plan to delve into the details of these auditing models in the coming weeks. My background in cybersecurity, information security, and auditing motivates me to explore these areas further and share them.

💡 Conclusion

Trust is no longer just a matter of reputation; it’s a system of verifiable processes. Regulatory bodies check if the code works correctly, while code-based auditing systems verify what institutions claim. These two systems complement each other.

Perhaps the most powerful financial systems of the future will be shaped not by the question of “who provides trust” but by “who verifies trust.”

📚 Sources and Further Reading

European Commission, Markets in Crypto Assets (MiCA) Regulation
Circle, Transparency Reports
Grant Thornton, USDC Attestation Reports
Tether, BDO Global Assurance Reports
Chainlink, Proof of Reserve Documentation
BIS, Project Guardian Overview
J.P. Morgan Onyx, Official Site
IMF, Regulating Stablecoins for a Digital Monetary Future