Texas bill could require crypto firms to show they can cover user balances
The state's House of Representatives has passed, but not enacted, the bill.
Texas’ House of Representatives passed a bill requiring crypto companies to prove they have sufficient assets on hand on April 20.
The bill, designated HB1666, could require companies to maintain sufficient reserves to cover all user obligations (crypto deposits and balances).
It could also require crypto companies to provide customers and auditors with accounting reports every quarter. Those reports must detail outstanding liabilities owed to the customer and the amount of crypto held in reserve by the company.
Companies must also file a report containing other information with the Texas Department of Banking before the 90th day after the end of each fiscal year.
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. However, the bill’s language suggests that companies must supply individuals with personalized reports rather than company-wide reports.
The rules apply to digital asset service providers that serve more than 500 Texas-based using those digital asset services 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.
The bill has not been passed by Texas’ senate, nor has it been signed into law. It is unclear if or when the bill will reach these stages.
Texas legislators are separately advancing legislation that aims to eliminate incentives previously offered to cryptocurrency mining firms.