On April 20, the Texas House of Representatives approved a bill requiring cryptocurrency exchanges to maintain reserves “in an amount sufficient to fulfill all customer obligations.” If the bill is approved by the Senate and signed by the governor, it could become law on September 1, 2023.
The proposed legislation modifies Section 160 of the Texas Finance Code. According to these amendments, digital asset providers serving more than 500 customers in a state and having at least $10 million in customer funds would be prohibited from commingling customer funds with other types of operational capital and using customer funds for transactions than the one requested by the customer.
In addition, the provider would have to maintain sufficient reserves to permit all possible withdrawals immediately. It should also “create a plan” to enable auditors to review the customer-facing information.
By the ninetieth day following the end of each fiscal year, an exchange must submit a report to the State Banking Department detailing its outstanding liability to customers. The information should also include an auditor’s certification.
The Banking Department can revoke the provider’s license if it fails to comply with the requirements.
Following the market disasters of 2022, Texas adopted a cautious stance toward cryptocurrency. The state senate passed a bill on April 12 to remove incentives for local cryptocurrency miners.
