THE Texas has taken significant steps to strengthen oversight of cryptocurrency exchanges in its jurisdiction. The Southern US state has passed legislation that could require these platforms to maintain reservations “ in sufficient quantity to fulfill all obligations to customers “.
This new legislation, Bill 1666 of the Texas Room, which amends the Texas financial code, passed the state House of Representatives earlier this year. After three readings in the Senate, the text of the law has not undergone any significant change compared to the previous draft.
Strengthening Consumer Protection in the Digital Asset Space
Under the amendments, digital asset providers serving more than 500 customers in the state, with at least $10 million in customer funds, would be Prohibited from mixing client funds with any other type of operational capital, and to use client funds for any other transaction than the original transaction requested by the customer.
In addition, exchanges must maintain sufficient reserves to meet all possible withdrawal requests at any time. Within 90 days of the end of each fiscal year, companies must submit a report to the Banking Department of Texas regarding their existing liability to customers.
The consequences of non-compliance
If the supplier does not comply with the requirements, the department would have the right to revoke its license. Texas is a place of proactive lawmakers when it comes to the crypto. In addition to the proof of reserves bill, the Senate voted in April on a law around crypto mining incentives. At the same time, Texas lawmakers voted to amend the State’s Bill of Rights, adding a provision recognizing the right of individuals to own, maintain, and use digital currencies.
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