The Texas legislature has recently been quite busy in the world of cryptocurrency, with the passage of a new bill regarding digital asset service providers. HB-1666, co-sponsored by state Republicans Rep. Giovanni Capriglione and Sen. Tan Parker, sees the Lone Star State take a step towards requiring cryptocurrency exchanges to provide a “proof of reserves” for their operations.
The bill aims to increase financial transparency, particularly amongst digital asset service providers such as Binance. This limit would require cryptocurrency exchanges that serve over 500 customers or manage above $10 million in customer funds to maintain reserves sufficient to fulfill all obligations to digital asset customers. This excludes the commingling of customer funds and requires providers to file a report to the state, including an attestation by an auditor.
Supporters of HB-1666, like Lee Bratcher, president of the Texas Blockchain Council, argue that the bill fosters a continuation of the “light touch regulatory stance” that Texas has been known for, while still implementing necessary financial safeguards for its residents. However, skeptics might regard this bill as only a small step towards preventing fraud in the digital asset industry. Bratcher acknowledges this, admitting that the bill is not entirely sufficient, but remains a useful tool for the Texas government.
Last week, Texas lawmakers also unanimously voted to update the state’s bill of rights to specifically include the right of its residents to own, hold, and use digital currency. According to the amendment, no government shall prohibit or encumber the ownership or holding of any form or amount of money or other currency traded for goods and services.
Meanwhile, Texas senators have passed a bill that has yet to be taken up in the House. This bill would, among other things, remove tax incentives for virtual currency miners in the state.
While the legislators in Texas seem to be making headway in regulating the digital currency market, it remains unclear whether these efforts can truly prevent major fraud cases within the industry or just function as temporary, less-effective measures. Only time will tell if cryptocurrencies and the blockchain technology driving it are here to stay, but one thing is for sure – the responsibility of ensuring the safety of digital assets and their users falls on both regulators and the crypto community.