Texas Passes Bill That Requires Crypto Exchanges To Show Proof-Of-Reserves• May 19, 2023 10:16 pm • Comments
Texas just passed a new bill that marks a new milestone for the crypto industry which may help crypto achieve more mainstream adoption.
In this bill, the legislation requires that crypto exchanges must show that proof-of-reserves in order to protect their clients and ensure that the assets are safe.
This allows for legitimate crypto exchanges to continue to grow while keeping fraud away from the industry.
Specifically, this would prevent illegitimate exchanges like FTX from putting their customer assets at risk and would start to bring trust back to crypto exchanges.
The bill had passed the Senate on May 15th which means that it has already become law.
BREAKING: The Texas Legislature has just passed a first-of-its-kind proof of reserves bill! Here is a quote from the bill's author, Rep. @VoteGiovanni: “From the onset, we set out to create a model that would not just protect Texas consumers, but provide a path forward for the… pic.twitter.com/ob0zgHis4G
— Lee ₿ratcher (@lee_bratcher) May 17, 2023
Amid the unclear landscape of crypto regulation in the country, one state is seeking to change that. Specifically, the Texas Senate has passed a proof-of-reserve bill that would require crypto exchanges to provide proof-of-reserve information to their users.
Titled Texas House Bill 1666, it will amend the state’s finance code. Moreover, it had already passed through the Texas House of Representatives this year, with the Senate passing the bill after three different readings.
The amendment states that exchanges that serve more than 500 Texas-based customers with at least $10 million in customer funds face certain restrictions. Specifically, they are prohibited from commingling customer funds for any ulterior purpose.
The bill is a step in the right direction as it provides clear guidelines that protect crypto investors while not interfering with legitimate crypto firms.
With this, insitutions would be more confident in putting their capital at such exchanges which is very much needed for the crypto market to grow.
The bill also requires that an exchange submit a report to the Texas Department of Banking that details all customer liabilities.
Hopefully, many other states besides Texas will also start to apply a similar bill as this is needed to provide good regulation to the industry.
📢 Exciting news from Texas! The Texas House of Representatives has passed a bill requiring Bitcoin companies to provide 'Proof of Reserves.' This move enhances transparency and accountability in the crypto industry. 🚀 #Bitcoin #Texas #Transparency #CryptoNews pic.twitter.com/jtSQWqdn6d
— Today Crypto By Rananjay Singh (@TodayCryptoRj) May 19, 2023
HB-1666, co-sponsored by state Republicans Rep. Giovanni Capriglione and Sen. Tan Parker, applies to digital asset service providers that serve more than 500 customers or has $10 million in customer funds, and requires them to maintain reserves in an “amount sufficient to fulfill all obligations to digital asset customers.”
The bill also bans commingling of customer funds and requires those providers to file a report to the state with an attestation by an auditor along with other filings.
“This bill increases transparency by requiring proof of reserve attestations from digital asset service providers, think exchanges, while continuing a light touch regulatory stance and pro-business environment that Texas has cultivated for many decades,” said Lee Bratcher, president of the Texas Blockchain Council, on May 17 in a video on Twitter.
JUST IN: 🇺🇸 Texas Senate passes bill requiring #crypto exchanges to provide proof of reserves.
— Watcher.Guru (@WatcherGuru) May 19, 2023
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