Proof of Reserve’s Legislation Inches Closer To Becoming a Law in Texas

• The legislation now only needs the governor’s signature to become law.
• The exchanges must also have enough money in reserve to cover all possible withdrawals.

Reserves “in an amount sufficient to fulfil all obligations to customers” may soon be required by exchanges in Texas under the proposed legislation. The state Senate approved the measure on May 15. And it now only needs the governor, Greg Abbott’s signature to become law.

Earlier this year, the Texas House of Representatives approved House Bill 1666, which made changes to the Texas Finance Code. There have been no major modifications to the bill’s text after three readings in the Senate.

Sufficient Reserves Mandatory

The amendments prohibit digital asset providers with more than 500 customers in the state and more than $10 million in customer funds from using customer funds for purposes other than the original transaction requested by the customer, as well as from comingling the customer funds with any other type of operational capital.

The crypto exchanges must also have enough money in reserve to cover all possible withdrawals at any one time. Companies in Texas are required to disclose their outstanding debt to customers to the Texas Department of Banking. This has to be done within 90 days of the end of each fiscal year.

If the service provider doesn’t meet the standards, the government agency may pull its permit. When it comes to crypto, politicians in Texas are among the most pro-active in the country. In April, the Senate passed a measure to restrict cryptocurrency mining incentives in addition to the proof-of-reserves law.

Coincidentally, Texas legislators approved a change to the state’s Bill of Rights that would include a clause protecting people’s ability to own, keep, and spend virtual currency.