• Texas recently passed a bill, HB1666, that requires cryptocurrency exchanges to provide transparency and protection for users.
• This bill is directed towards digital asset service providers and exchanges with more than 500 Texas-based users or $10 million in customer funds on their platforms.
• Exchanges are expected to present quarterly accounting reports to auditors and customers, which will include attestations of outstanding liabilities and digital asset reserves held by the exchange.
Texas Passes Bill For Cryptocurrency Exchanges
The House of Representatives in Texas recently passed a bill named HB1666 that could change the dynamics of crypto exchange operations. This bill mandates cryptocurrency exchanges to provide accountability by presenting their Proof-of-Reserves. It also seeks to ensure user protection by requiring full transparency from exchanges.
Who Is Covered By The Bill?
This bill applies to all digital asset service company providers and exchanges offering their services to more than 500 Texas-based users or digital asset providers with at least $10 million in customer funds on their service platforms.
What Are The Requirements?
Exchanges must maintain adequate fund reserves to cater for user commitments and obligations, including digital asset deposits and balances. They are also expected to present quarterly accounting reports to auditors and customers utilizing their platform services. These reports should include an attestation of outstanding liabilities and the exact amount of digital assets in reserves held by the exchange or company. The attestations must be established using zero-knowledge encryption frameworks.
Why Is User Protection Important?
User protection cannot be over-emphasized when it comes to investing in cryptocurrencies as news of multiple hacks have downplayed the industry’s growth, with FTX collapse being a major one. This new bill seeks to protect investors from bad actors while enabling them access investment opportunities in cryptocurrencies, thus promoting growth within the industry overall.
The passing of this new bill presents a huge opportunity for investor protection while providing an avenue for investors accessing life-changing wealth investment opportunities offered through cryptocurrencies . With this bill, cryptocurrency exchanges can now offer greater transparency and assurance that investments are kept safe from malicious activities or actors within the industry.