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Texas Senate Approves Bill to Regulate Crypto Exchanges

Key Takeaways
  • Texas bill mandates reserves for crypto exchanges: Texas House Bill 1666 requires cryptocurrency exchanges to maintain reserves to meet customer obligations
  • Stricter rules for digital asset providers: The bill regulates exchanges with over 500 customers and $10 million in customer funds, prohibiting commingling and misuse of funds
  • Protection and accountability: The legislation aims to protect customers, ensure responsible operations, and enforce reporting requirements for exchanges in Texas
20-May-2023 By: Simran Mishra
Texas Senate Approve

Texas Moves Closer to Enacting Cryptocurrency Exchange Regulations to Safeguard Customer Funds

Legislation that could make it mandatory for cryptocurrency exchanges in Texas to maintain reserves sufficient to meet their customer obligations has moved one step closer to becoming law. The bill, called Texas House Bill 1666, has successfully passed a vote in the state Senate and is now awaiting the governor's signature to take effect.

Earlier this year, the bill went through readings in the state's House of Representatives with only minor changes. The proposed changes aim to regulate digital asset providers that serve more than 500 customers in Texas and hold at least $10 million in customer funds. These providers would be prohibited from mixing customer funds with other operational money and using customer funds for anything other than the original customer request.

Additionally, the bill requires exchanges to keep reserves that are enough to cover potential customer withdrawals at any time. Companies would also need to submit a report to the Texas Department of Banking within 90 days after each fiscal year, detailing their customer liabilities.

If a provider fails to comply with these requirements, their license can be revoked by the department.

Texas has been proactive in its approach to cryptocurrency legislation. In addition to this bill, the state Senate previously passed a measure to limit incentives for crypto mining. Lawmakers in Texas have also amended the state's Bill of Rights to recognize the rights of individuals to own, keep, and use digital currencies.

The legislation aims to establish stricter rules for cryptocurrency exchanges in Texas, aiming to protect customers and ensure responsible operations by digital asset providers in the state.

Also read - Singapore's Whampoa Group to Launch Digital Bank in Bahrain

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