Texas House of Representatives Passes Bill Mandating Proof of Reserves for Crypto Exchanges
The Texas House of Representatives has voted to pass a new bill that would require crypto exchange platforms operating in the state to prove they have reserves to back up their assets.
According to a new press release by The Chamber of Digital Commerce, a blockchain advocacy group, the Texas House of Representatives passed HB1666 on April 20th with the aim of rebuilding trust in the industry.
The bill, which was first filed by State Representative Giovanni Capriglione, applies to crypto exchanges that serve more than 500 customers in the state or one that has at least $10 million worth of customer funds.
The bill mandates that crypto exchange platforms “shall maintain reserves in an amount sufficient to fulfill all obligations to digital asset customers.”
It also instructs firms to formulate a plan that would task crypto exchanges to provide a quarterly accounting of any liabilities owed to customers as well as the assets they have in reserve. Furthermore, an auditor must be able to access and view the same information provided to customers at any time.
The legislation’s text also says that crypto asset service providers may not commingle their own funds with customer funds, use customer funds to secure a transaction other than transactions for customers contributing to the funds, or hold customers’ funds in a way where users would be unable to fully withdraw them or invest their funds in non-approved ways.
As stated by Perianne Boring, the CEO of The Chamber of Digital Commerce, in the press release,
“This legislation represents an essential step towards ensuring the stability and security of the digital asset market, and it is very promising to see this bill move forward…
The proof-of-reserves requirement in this bill is exactly what should be required by custodians to demonstrate that they hold sufficient assets to cover all customer deposits.”
The bill passed with 148 yea votes, zero nays, and one abstained vote, according to Legiscan. However, the bill would still need to pass the state’s Senate before it can be signed into law.
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Featured Image: Midjourney
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