By passing a bill mandating cryptocurrency exchanges to keep reserves, the US state of Texas is taking a major step towards improved transparency and consumer safety in the crypto business.
On May 15th, the state Senate voted to approve proof-of-reserves legislation, which only needs the governor’s signature to become law. The measure has undergone many readings in the Senate and has altered little from its original form.
Providers of digital assets to more than 500 consumers in the state, handling a total of at least $10 million in customer cash, will be subject to the new regulations requiring them to segregate customer monies from operating funds. In addition, these monies must be utilised only to complete the transaction for which they were originally provided by the consumer.
The bill’s second major component requires exchanges to have reserves big enough to handle all possible withdrawals at any given time. A report documenting the company’s current obligation to consumers must be submitted to the Texas Department of Banking within 90 days of the close of each fiscal year. If these conditions aren’t met, the banking authority might revoke the provider’s licence.
In terms of crypto regulation, Texas has emerged as a leader. In addition to passing the proof-of-reserves measure, the Senate recently approved legislation to reduce cryptocurrency miners’ financial incentives. Legislators in Texas have made changes to the state’s Bill of Rights to reflect the growing acceptance of cryptocurrency ownership and use.
Proof-of-reserve legislation is an important step towards restoring faith in the crypto market and protecting Texans’ financial interests.
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