Texas proof-of-reserve bill passes through the Senate

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The legislation would oblige exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers.”

Legislation that could require exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers” has made it one step closer to becoming law in Texas. On May 15, the bill passed a vote in the state Senate and now awaits only the governor’s signature. 

Texas House Bill 1666, amending the Texan finance code, passed through the state’s House of Representatives earlier this year. After three readings in the Senate, the text of the bill hasn’t experienced any significant changes from the previous draft.

Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million of customer funds, would be restricted from comingling the customer funds with any other type of operational capital, and using customer funds for any further transactions besides the original transaction demanded by the customer.

Related: Bitcoin advocates rally at Texas State Capitol to oppose bill cutting mining incentives

Also, the exchanges must maintain reserves sufficient to accommodate all potential withdrawals at any given moment. Within 90 days following each fiscal year’s conclusion, companies must submit a report to the Texas Department of Banking regarding their existing liability to customers.

Should the provider fail to comply with the requirements, the department would have a right to revoke its license.

Texas is an area of proactive legislators when it comes to crypto. Apart from the proof-of-reserves bill, the Senate moved to limit crypto mining incentives was voted in by the Senate in April. At the same time, Texan lawmakers voted to amend the state’s Bill of Rights, adding a provision recognizing the right of individuals to possess, retain and utilize digital currencies.

Magazine: Crypto regulation. Does SEC Chair Gary Gensler have the final say?

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