Crypto exchanges that want to do business in Texas will need to maintain enough reserves to fulfill all obligations to their customers, according to a newly-approved piece of legislation.

The Texas legislature today approved House Bill 1666 (HB1666) to establish “proof of reserves” rules requiring crypto exchanges to provide an audited or on-chain proof of assets at all times.

Last week, the Texas House of Representatives sent the bill to the state senate. Discussion of the bill concluded today with a vote.

Aiming to amend the state’s finance code, the law enacts regulations and duties stating that companies cannot maintain customer funds in such a manner that cannot be “fully withdrawn” by users, nor can these be used for any other purposes than a customer transaction.

HB-1666, co-sponsored by Texas Rep. Giovanni Capriglione and Sen. Tan Parker, will also require companies to segregate and separately account for customer funds, effectively banning “commingling” or mixing user deposits with other digital assets, the service provider’s capital, or “other property that does not belong to the customer.”

The bill “increases transparency while continuing t

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Author: Pedro Solimano

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