Legislation that could require exchanges to maintain reserves “sufficient to meet all obligations to customers” brings it one step closer to becoming law in Texas. The bill passed the state Senate on May 15 and now only awaits the governor's signature.
Texas House Bill 1666, which amends Texas' financial code, passed the state's House of Representatives earlier this year. After a third reading in the Senate, the text of the bill did not undergo any significant changes from the previous draft. Under the amendment, digital asset providers serving more than 500 clients in the state and having at least $10 million in client funds will be restricted from commingling client funds with any other type of operating capital and from using client funds for other purposes. Any further transactions o ther than the raw transaction requested by the client.
Additionally, exchanges must maintain sufficient reserves to accommodate all possible withdrawals at any given moment. Within 90 days of the end of each fiscal year, the firm must file with the Texas Department of Banking a report on its existing obligations to customers.
If a provider fails to comply with the requirements, the department will have the power to revoke its license. Texas is an area where lawmakers have been proactive when it comes to encryption. In addition to the Proof of Reserves bill, the Senate also voted in April to limit incentives for cryptocurrency mining. Meanwhile, Texas lawmakers voted to amend the state's bill of rights, adding a provision recognizing an individual's right to own, retain and use digital currency.
