A bill that could soon become law in Texas aims to enforce stricter regulations on digital asset providers operating within the state. Texas House Bill 1666, which recently passed a vote in the state Senate and now awaits the governor’s signature, seeks to amend the Texan finance code and ensure that exchanges maintain reserves “in an amount sufficient to fulfil all obligations to customers.”
The bill, which had previously passed through the state’s House of Representatives, has undergone three readings in the Senate with no significant changes to its original text. Under the proposed amendments, digital asset providers serving more than 500 customers in Texas and holding at least $10 million of customer funds will face certain restrictions and obligations.
Firstly, these providers will be prohibited from commingling customer funds with any other type of operational capital. They will also be restricted from using customer funds for transactions other than those specifically demanded by the customers. In addition, exchanges will be required to maintain reserves capable of accommodating all potential withdrawals at any moment.
To ensure compliance, companies will be mandated to submit an annual report to the Texas Department of Banking within 90 days of the conclusion of each fiscal year. This report will detail the existing liability of the companies to their customers. Failure to comply with these requirements could result in the revocation of a provider’s license by the department.
Texas has demonstrated a proactive approach to cryptocurrency legislation. In addition to the proof-of-reserves bill, the state Senate recently voted to limit crypto mining incentives in April. Furthermore, Texan lawmakers have also voted to amend the state’s Bill of Rights, recognizing the right of individuals to possess, retain, and utilize digital currencies.
If signed into law by the governor, this legislation will represent another significant step forward in Texas’ efforts to regulate the digital asset industry and protect consumers. It remains to be seen how these new regulations will impact cryptocurrency exchanges’ operations and the state’s broader cryptocurrency landscape.
