- After multiple issues with lack of reserves within crypto exchanges has brought attention and policy to be passed.
- Digital asset providers would be restricted from comingling customer funds with any other type of operational capital.
- Regulation around crypto brings security and trust which will attract more investor and grow the industry.
The Texas House of Representatives approved a bill requiring crypto exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers” on April 20.
Should the bill pass the Senate and receive the governor’s signature, it would become law by September 1.
The bill introduces amendments to the Texan Finance Code, namely Section 160. Under the amendments, digital asset providers that serve more than 500 customers in the state and have at least $10 million of customer funds would be restricted from comingling the customer funds with any other type of operational capital and using customer funds for any further transactions besides the original marketing demanded by the customer.
In addition, the provider would have to hold reserves in an amount enough to let all the possible withdrawals immediately. It should also “create a plan” to allow auditors to review the information available to the customer.
By the 90th day after the end of each fiscal year, an exchange will need to file a report about its outstanding liability to customers with the State Banking Department. The information should also include an attestation by the auditor.
If the provider fails to comply with the requirements, the Banking Department would have a right to revoke its license.
In the aftermath of 2022’s market failures, Texas took a cautious approach toward crypto. On April 12, the state Senate approved a bill to remove most incentives for local crypto miners.
