• Texas Senate passes bill requiring exchanges to maintain reserves to fulfill customer obligations.
• The legislation would be enforced by the Texas Department of Banking and will apply to exchanges serving over 500 customers with at least $10 million of customer funds.
• It is part of a series of proactive legislative moves in Texas regarding cryptocurrencies.
Texas Proof-of-Reserve Bill Passes Through Senate
The Texas Senate has passed a bill that would require cryptocurrency exchanges operating in the state to maintain reserves “in an amount sufficient to fulfill all obligations to customers”. The legislation, House Bill 1666, amends the Texan finance code and is set to be signed into law by Governor Greg Abbott.
Enforcement and Scope of Law
The enforcement of this law would fall upon the Texas Department of Banking, which will also have authority to revoke license if a provider fails to comply with requirements. This law applies only to digital asset providers who serve more than 500 customers in the state, with at least $10 million of customer funds.
What Else is Happening in TX?
The proof-of-reserves bill is just one piece out of a larger puzzle for cryptocurrency regulation in Texas. Earlier this year, lawmakers voted on amendments that cut mining incentives as well as adding a provision recognizing individuals’ right to possess and use digital currencies into the State’s Bill of Rights.
Impact on Crypto Industry
This new law could have wide implications for cryptocurrency exchanges operating in Texas; not only does it give users more assurance that their funds are safe but it also provides clarity on expectations from regulators for companies wanting do business within the state’s borders. On top of this, it adds another layer onto existing consumer protection laws ensuring that users can trust their investments are secure when using these services.
With the vote passing through both chambers unanimously, all that remains now is for Governor Abbott’s signature—which given how much support it has received thus far seems likely—for this regulation to become official policy in Texas’ crypto scene going forward.