Texas Bill Requires Crypto Exchanges To Provide Proof Of Reserves• April 21, 2023 10:52 am • Comments
The House of Representatives in Texas just passed a new bill that is aimed at protecting crypto investors from unethical crypto exchanges such as FTX.
This new bill essentially requires all crypto exchanges to provide proof of reserves which indicates that the exchange does indeed have the assets to backup its operations and fulfill its client obligations.
The purpose is to hopefully bring more transparency between exchanges and users which would eventually bring more trust back to the crypto industry after the FTX collapse.
The bill was passed on Thursday and was received positively by the crypto community as Texas has always been known to be one of the most pro-crypto states along with Arizona.
All exchanges and service providers that have more than 500 users or handle more than $10 million in customer funds will be subject to this new bill’s requirements.
BREAKING: 🇺🇸 Texas House of Representatives passed a bill requiring #Bitcoin and #Crypto exchanges to provide proof of reserves 🔥 pic.twitter.com/z6D2Qq4aAZ
— Keyur Rohit (@CryptoKingKeyur) April 21, 2023
The new bill requires a digital asset service provider, not later than the 90th day after the end of each fiscal year, to file a report with the Texas Department of Banking.
The reports, according to the TDB, must include the following:
- An attestation by the digital asset service provider of outstanding liability to digital asset customers, documented using zero-knowledge encryption or a similar industry standard
- evidence of customer assets held by the person, documented using zero-knowledge encryption or a similar industry standard
- an attestation by an auditor that the information in the report is true and accurate
- a copy of the provider’s plan to allow auditors and customers to view the accounting of digital assets quarterly, as well as the customer’s digital assets at any time.
It is expected that this will bring more customers to the crypto industry as they will have more assurance that their assets are actually safe.
With that being said, having self-custody of one’s own crypto is always the safest option no matter what the situation.
The bill could also mandate that crypto exchanges provide accounting reports to auditors in order to provide up to date information on what assets and liabilities the exchange has.
Currently, the bill has passed the House of Representatives and has moved on to see if the Senate will approve it.
Such a bill will certainly prove to be bullish for the crypto industry as the industry needs clear regulation and protection for investors.
Texas’ House of Representatives passed a bill requiring crypto companies to prove they have sufficient assets on hand on April 20.
The bill, designated HB1666, could require companies to maintain sufficient reserves to cover all user obligations…https://t.co/dlrltyMn7T
— Michael Branch (@Michael63140627) April 21, 2023
This newly passed bill is in accord with the recent legislation, which makes it clear that all digital asset providers, including cryptocurrency exchanges, must submit a detailed report before or on the 90th day after each fiscal year.
The newly passed bill could pass for bullish news in the crypto space as new users may be drawn to the industry stemming from the sense of adequate security provision and transparency they perceive to be offered by exchanges.
The markets showed positive signs of recovery in recent weeks after a rally from Bitcoin, which pushed alongside a number of Altcoins. Currently, the total cryptocurrency market capitalization is at $1.15 trillion, with more room for growth to the upside.
[NEW] ‘Proof of Reserve’ bill passes in Texas House of Representatives + https://t.co/sYMyRG7EQk #bitcoin #btc #cryptocurrency #crypto #blockchain #eth
— r/CryptoCurrency (@rCryptoReddit) April 21, 2023
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