Texas has taken a significant step towards implementing legislation that would require cryptocurrency exchanges to maintain reserves sufficient to fulfill customer obligations. The bill, known as State Bill 1666, has passed the Senate and awaits the signature of the state governor to become law.
The legislation, which amends the Texas Finance Code, has remained largely unchanged since its initial draft. It received approval from the Senate on May 15, 2023, following its passage in the state House of Representatives earlier this year.
The introduced amendments in the bill impose restrictions on digital asset providers operating in the state. Digital asset providers with more than 500 customers in the state and holding at least $10 million in customer funds will be prohibited from mixing these funds with operational capital. They will also be restricted from using customer funds for transactions other than those explicitly requested by customers.
Additionally, the exchanges will be required to maintain sufficient reserves to cover potential customer withdrawals at all times. They will also need to submit a report to the State Banking Department within 90 days after the end of each fiscal year, detailing their customer liabilities.
The State Banking Department will have the authority to revoke the license of any provider that fails to comply with the regulations outlined in the legislation, signaling a strict enforcement approach.
Texas has shown proactive support for cryptocurrencies. The Texas House of Representatives recently approved an amendment to the Texas Bill of Rights to safeguard individuals’ rights to possess, hold, and utilize digital currencies. This approval received overwhelming support, with 139 votes in favor and only 2 against.
The bill, known as HJR 146 and introduced by State Representative Giovani Capriglione, asserts that individuals have the freedom to engage in the exchange of goods and services using any mutually agreed-upon means of exchange, which includes traditional forms such as cash, coins, and gold, as well as modern digital currencies and scrip.
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