- Texas Rep. Giovanni Capriglione files House Bill 1666 to safeguard consumers investing in cryptocurrencies by requiring digital asset exchanges to maintain sufficient reserves.
- The bill enforces regular reporting to customers and auditors, ensuring transparency and accountability in the crypto market.
Texas Rep. Giovanni Capriglione has filed House Bill 1666, aiming to protect consumers investing in digital assets like cryptocurrencies. The bill mandates that digital asset exchanges verify they have adequate funds in reserve to pay customers upon request while prohibiting the commingling of consumer funds with corporate assets. This legislation seeks to prevent investors from experiencing the same losses as those who invested in the FTX crypto trading platform.
HB1666’s Requirements for Crypto Companies
HB1666 requires crypto companies to maintain sufficient reserves to cover all user obligations, including crypto deposits and balances. The bill also enforces quarterly provision of accounting reports to customers and auditors, detailing outstanding customer liabilities and the company’s held crypto reserves. Furthermore, companies must file an annual report with the Texas Department of Banking.
Applicability of HB1666 and how it compares to to Existing Proof-of-Reserve Reports
The bill’s requirements resemble the proof-of-reserve reports already published by major exchanges such as Binance, Coinbase, and Kraken. However, the legislation indicates that companies must provide personalized reports to individuals instead of company-wide reports.
The rules apply to digital asset service providers serving over 500 Texas-based users or those holding at least $10 million in customer funds. However, banks and companies not required to hold money service licenses are exempt from these rules.
Progress of the Bill and Related Legislation Texas’ House of Representatives has passed the bill, but it has not yet been enacted by the Senate or signed into law. Its future progress remains uncertain. Additionally, Texas legislators are advancing separate legislation targeting incentives previously offered to cryptocurrency mining firms.
Conclusion:
House Bill 1666, filed by Texas Rep. Giovanni Capriglione, aims to protect consumers investing in cryptocurrencies by imposing reserve requirements and reporting obligations on digital asset exchanges. The bill focuses on ensuring the security of consumer funds, enhancing transparency, and promoting accountability in the crypto market. As Texas legislators continue to develop cryptocurrency-related legislation, the future of the state’s regulatory environment remains to be seen.
