The Texas legislature has passed a bill that requires cryptocurrency exchanges to provide a “proof of reserves.” This move is the latest by the state to regulate the digital asset industry.
Details of the Bill
The bill, known as HB-1666, was co-sponsored by state Republicans Rep. Giovanni Capriglione and Sen. Tan Parker. It applies to digital asset service providers that serve more than 500 customers or have $10 million in customer funds. The bill requires these providers to maintain reserves in an “amount sufficient to fulfill all obligations to digital asset customers.” Additionally, the bill bans commingling of customer funds and requires providers to file a report to the state with an attestation by an auditor along with other filings.
Transparency and Regulation
Lee Bratcher, president of the Texas Blockchain Council, praised the bill for increasing transparency in the digital asset industry. In a video on Twitter, Bratcher said that the bill “continues a light touch regulatory stance and pro-business environment that Texas has cultivated for many decades.” However, he also noted that the bill is not sufficient to prevent fraud in the industry.
Expansion of Digital Currency Rights
In addition to passing the bill requiring proof of reserves, Texas lawmakers also voted unanimously to include the right of residents to own, hold, and use digital currency in the state’s bill of rights. The bill reads, “The right of the people to own, hold, and use a mutually agreed upon medium of exchange, including cash, coin, bullion, digital currency, or privately issued scrip, when trading and contracting for goods and services shall not be infringed.”
Removal of Tax Incentives
The Texas senate has also passed a bill that would remove tax incentives for virtual currency miners. However, this bill has not yet been taken up in the House.
Overall, these moves by the Texas legislature show a growing interest in regulating the digital asset industry while also expanding the rights of residents to use and hold digital currency. The bill requiring proof of reserves is a step towards increased transparency and accountability in the industry, although it is not a foolproof solution to preventing fraud. As the digital asset industry continues to grow, it is likely that more states will follow Texas’s lead in regulating the industry.