The Texas House of Representatives passes the ‘Proof of Reserves’ bill

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By Degen Lipsa

Customers’ funds would be prohibited from being mixed with any other sort of operational capital by digital asset providers as per The Texas House .

On April 20, the Texas House of Representatives approved legislation requiring cryptocurrency exchanges to keep reserves “in an amount sufficient to fulfil all obligations to customers.”

If the bill passes the Senate and is signed by the governor, it will become law on September 1.

The bill amends the Texas Finance Code, specifically Section 160. The amendments would prohibit digital asset providers that serve more than 500 customers in the state and have at least $10 million in customer funds from combining the customer funds with any other type of operational capital or using the customer funds for any other transaction other than the original transaction requested by the customer.

Furthermore, the provider would have to keep reserves large enough to cover any possible withdrawals right away. It should also “create a plan” for auditors to review the information provided to the consumer.

An exchange must file a report with the State Banking Department on its outstanding liabilities to clients by the 90th day after the end of each fiscal year. The report should also include the auditor’s attestation.

If the provider fails to meet the conditions, the Banking Department has the authority to cancel its licence.

Following the market disasters of 2022, Texas took a cautious approach to cryptocurrency. On April 12, the state Senate passed legislation to remove disincentives for local crypto miners.

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