Texas Proof-Of-Reserve Bill Passes Through The Senate

Texas is taking a significant step towards increased transparency and consumer protection in the crypto ecosystem. This is evident as legislation requiring crypto exchange to maintain reserves moves closer to becoming a law. On May 15, the proof-of-reserves bill passed a vote successfully in the state senate, and it only awaits the Governor’s signature to become law.

The bill, Texas House Bill 1666, seeks to amend the Texan finance code. Previously, it passed through the state’s House of Representatives. The bill remains essentially unchanged from the initial draft throughout the Senate readings.

Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million of customer funds, would be required to keep customer funds separate from operational capital. Further, the customer funds should not be used for any other transactions besides the original marketing demanded by the customer.

Notably, the exchanges must maintain reserves sufficient to accommodate all potential withdrawals at any given moment. Additionally, companies must submit a report to the Texas Department of Banking within 90 days after the end of each fiscal year regarding their existing liability to customers.

However, failure to comply with the requirements might result in the banking department’s revocation of the provider’s license. Noteworthy, Texas has emerged as a proactive jurisdiction regarding crypto regulation. Apart from the proof-of-reserve, the Senate recently voted to limit crypto mining incentives.

Texas Effort To Safeguard Crypto Users

In an April 4 committee session, Texas lawmakers agreed to move forward 10-0 on Senate Bill 1751. The proposed legislation would amend sections of Texas’ utilities and tax code to add restrictions to crypto mining facilities.

On the other hand, the Texas lawmakers have also amended the states’ Bill of Rights, recognizing the rights of individuals to possess, retain, and utilize digital currencies. It is worth noting that once the proof-of-reserves bill becomes law, it will significantly strengthen consumer trust and safeguard the interests of crypto users in Texas.

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