Exchanges would be required by the legislation to keep reserves “in an amount sufficient to fulfill all obligations to customers.”
A Texas bill that would require exchanges to keep enough reserves on hand to meet consumer obligations has moved one step closer to becoming a law. Texas House Bill 1666 is awaiting the governor’s signature after clearing the state Senate. The proposed legislation aims to tighten the rules that apply to companies that provide digital assets in Texas by amending the state’s financial code.
The proposed changes would apply to Texas-based digital asset providers with over 500 clients and at least $10 million in client money. These service providers would be forbidden from mixing client funds with operating capital and from utilizing client cash for any objective aside from the first transaction requested by the client.
This legislation’s goal is to improve customer protection and make sure that client monies are effectively protected. Texas wants to make a more safe environment for digital asset services and reduce any dangers connected with bitcoin exchanges by enacting stronger rules.
The approval of this bill shows how closely the bitcoin business is being regulated. The goal of regulators is to create frameworks that safeguard consumers and encourage the responsible operation of digital asset services.
The approval of the bill will mark a significant advancement in Texas’s regulation of companies that offer digital assets, demonstrating the state’s dedication to creating a secure and open environment for cryptocurrency-related operations.
The exchanges must also keep enough reserves on hand at all times to cover all prospective withdrawals. Companies are required to make a report to the Texas Department of Banking outlining their current customer liabilities within 90 days of the end of each fiscal year.
The department would have the ability to revoke the provider’s license if it didn’t follow the rules.