Texas Pushes for Crypto Transparency With User Balance Disclosure Rule

Key Points:

• Texas passed a bill requiring crypto companies to prove they have sufficient assets on hand.
• Companies may be required to maintain sufficient reserves to cover all user obligations.
• The bill’s requirements are in some ways comparable to the proof-of-reserve reports already published by leading exchanges such as Binance, Coinbase, and Kraken.

Texas House of Representatives passed a bill aimed at regulating the cryptocurrency industry.

The bill, known as HB1666, proposes that digital asset service providers maintain sufficient reserves to cover all user obligations, including crypto deposits and balances. Additionally, it may require crypto companies to provide detailed accounting reports on a quarterly basis to both customers and auditors. These reports would detail outstanding liabilities owed to the customer and the amount of crypto held in reserve by the company. Furthermore, the bill calls for companies to file a report containing other information with the Texas Department of Banking before the 90th day after the end of each fiscal year.

The proposed requirements in the bill are somewhat similar to the proof-of-reserve reports already published by major exchanges such as Binance, Coinbase, and Kraken. However, the language in the bill suggests that companies must supply personalized reports to individuals rather than company-wide reports.

It is important to note that the rules apply only to digital asset service providers that serve more than 500 Texas-based users or to digital asset service providers with at least $10 million in customer funds. The rules do not apply to banks, nor do they apply to companies that are not required to hold money services licenses.

As of now, the bill has not been passed by the Texas Senate, nor has it been signed into law. It remains unclear if or when the bill will reach these stages.

Texas legislators are also advancing separate legislation aimed at eliminating incentives previously offered to cryptocurrency mining firms. This demonstrates the state’s growing interest in regulating the cryptocurrency industry and ensuring that it operates within a safe and secure framework.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

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