May 19, 2023
Texas Senate Passes Bill Requiring Crypto Exchanges to Maintain Reserves
The Texas Senate has taken a major step toward protecting digital asset holders in the state by passing a bill that requires exchanges to maintain reserves “in an amount sufficient to fulfill all obligations to customers”. On May 15, the bill passed a vote in the state Senate and now awaits only the governor’s signature.
Texas House Bill 1666, amending the Texan finance code, passed through the state’s House of Representatives earlier this year. After three readings in the Senate, the text of the bill hasn’t experienced any significant changes from the previous draft.
Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million of customer funds, must not comele the customer funds with any other type of operational capital, and must not use customer funds for any further transactions besides the original transaction demanded by the customer.
The exchanges must also maintain reserves sufficient to accommodate all potential withdrawals at any given moment. Within 90 days following each fiscal year’s conclusion, companies must submit a report to the Texas Department of Banking regarding their existing liability to customers. Should the provider fail to comply with the requirements, the department would have the right to revoke its license.
The move to protect digital asset holders in Texas is part of a larger trend among Texan legislators to take proactive measures in the crypto space. In April, the Senate voted to limit crypto mining incentives, while also amending the state’s Bill of Rights to add a provision recognizing the right of individuals to possess, retain and utilize digital currencies.
The passing of House Bill 1666 is great news for digital asset holders in Texas, who can now be assured that their funds are safe and secure. It also highlights the importance of crypto regulation in the state, with the Texas Department of Banking taking a proactive approach to ensure that digital asset holders are protected.
The bill’s passing also has implications for the wider web3 space. With more exchanges being held to higher standards of financial responsibility, this could lead to more trust in the crypto space, which could in turn lead to increased adoption of digital assets. This could also pave the way for more NFT marketing and promotion, as well as increased demand for NFTs.
The passing of House Bill 1666 is a positive sign for digital asset holders in Texas, and could have far-reaching implications for the crypto space. It will be interesting to see how this bill affects the web3 space in the coming months, and what kind of impact it has on the adoption of digital assets.
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