The Texas House of Representatives has taken a significant step towards regulating the cryptocurrency industry with the passing of a new bill known as HB1666. The proposed legislation seeks to mandate that digital asset service providers maintain sufficient reserves to cover all user obligations, including crypto deposits and balances. Furthermore, it may require crypto companies to provide detailed accounting reports on a quarterly basis to both customers and auditors.
The bill’s requirements are similar to the proof-of-reserve reports already published by major exchanges such as Binance, Coinbase, and Kraken. However, the language in the bill suggests that companies must supply personalized reports to individuals rather than company-wide reports. This level of transparency and accountability is crucial in ensuring that customers are protected and that the cryptocurrency industry operates within a safe and secure framework.
It is worth noting that the proposed rules apply only to digital asset service providers that serve more than 500 Texas-based users 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. This approach strikes a balance between promoting innovation in the cryptocurrency industry while also ensuring that consumers are protected.
As of now, the bill has not been passed by the Texas Senate, nor has it been signed into law. It remains unclear if or when the bill will reach these stages. However, the fact that Texas legislators are advancing separate legislation aimed at eliminating incentives previously offered to cryptocurrency mining firms demonstrates the state’s growing interest in regulating the cryptocurrency industry.
In conclusion, the passing of the HB1666 bill by the Texas House of Representatives is a positive development for the cryptocurrency industry. The proposed legislation seeks to promote transparency and accountability while also protecting consumers. As the cryptocurrency industry continues to grow, it is essential that regulators strike a balance between promoting innovation and ensuring that consumers are protected.
