The Texas House of Representatives passes the bill requiring 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 from The Chamber of Digital Commerce, a blockchain advocacy group, the Texas House of Representatives passed HB1666 on April 20 with the aim of rebuilding confidence in the industry.
The bill, first filed by state Rep. Giovanni Capriglione, applies to crypto exchanges that serve more than 500 customers in the state or one that has at least $10 million in customer funds.
The bill requires crypto exchange platforms “to maintain reserves in an amount sufficient to meet all obligations to digital assets.”
It also instructs firms to formulate a plan that would task crypto exchanges to provide a quarterly accounting of any liabilities to clients, as well as the assets they hold in reserve. Furthermore, an auditor must at all times be able to access and see the same information that is given to customers.
The legal text also states that providers of cryptoassets cannot mix their own funds with customer funds, use customer funds to secure a transaction other than transactions for customers who contribute to the funds, or hold customer funds in a way where users cannot fully withdraw them or invest the funds in non-approved ways.
As stated by Perianne Boring, CEO of The Chamber of Digital Commerce, in the press release,
“This legislation represents an important 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 of custodians to demonstrate that they have sufficient assets to cover all customer deposits.”
The bill passed with 148 yes votes, zero no and one abstention, according to Legiscan. However, the bill will still need to pass the state Senate before it can be signed into law.
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