The US state of Texas is taking a significant step towards increased transparency and consumer protection in the cryptocurrency industry, as legislation requiring crypto exchanges to maintain reserves moves closer to becoming law. On May 15, the proof-of-reserves bill successfully passed a vote in the state Senate and now awaits only the signature of the governor.
The bill, known as Texas House Bill 1666, seeks to amend the Texan finance code and has previously passed through the state’s House of Representatives. Throughout the Senate readings, the bill has remained largely unchanged from its initial draft.
Under the proposed amendments, digital asset providers serving more than 500 customers in the state, with a minimum of $10 million in customer funds, will be required to keep customer funds separate from operational capital. Furthermore, these funds must not be used for any purpose other than fulfilling the original transaction requested by the customer.
Another key provision of the bill mandates that exchanges maintain reserves sufficient to cover all potential withdrawals at any given moment. Additionally, companies will be required to submit a report to the Texas Department of Banking within 90 days after the end of each fiscal year, detailing their existing liability to customers.
Non-compliance with these requirements may result in the revocation of the provider’s license by the banking department.
Texas has emerged as a proactive jurisdiction in terms of crypto regulation. In addition to the proof-of-reserves bill, the Senate recently voted in favor of limiting crypto mining incentives. Texan lawmakers have also amended the state’s Bill of Rights, recognizing the rights of individuals to possess, retain, and utilize digital currencies.
Once the proof-of-reserves bill becomes law, it will mark a significant step in strengthening consumer trust and safeguarding the interests of cryptocurrency users in Texas.