The Texas Blockchain Council announced that the state legislature has passed House Bill 1666, requiring cryptocurrency exchanges serving Texas users to provide proof of reserves and ensure customers can fully withdraw their funds under any circumstances.
Enhanced Security for Crypto Transactions in Texas
Introduced in January 2023 by State Representative Giovanni Capriglione and Senator Tan Parker, HB 1666 amends Texas’ Finance Code by adding a chapter on crypto asset regulation. The bill mandates:
- Segregation of user assets from operational funds
- Prohibition of unauthorized use of customer deposits
- Annual reserve audits submitted within 90 days of fiscal year-end
- License suspension/revocation for non-compliance
"Reserve proofs audited by the Department of Banking will address critical transparency gaps," said Capriglione, referencing collapses like FTX and 3AC.
👉 How proof of reserves protects crypto investors
Texas Emerges as a Crypto-Friendly Jurisdiction
This follows other progressive measures:
- Canceling mining incentives via Senate Bill 1751
- Adding crypto to the state’s Bill of Rights
Lee Bratcher, President of the Texas Blockchain Council, noted:
"This balances transparency with Texas’ business-friendly approach—though it’s not a cure-all for fraud."
Key Takeaways
| Aspect | Requirement |
|---|---|
| Asset Custody | User funds must be held separately |
| Reserve Audits | Annual proof-of-reserve submissions |
| Penalties | License revocation for violations |
FAQs
Q: When does HB 1666 take effect?
A: The law becomes effective September 1, 2023.
Q: Which exchanges are affected?
A: All platforms servicing Texas residents, including global exchanges.
Q: How does this compare to other states?
A: Texas joins New York (BitLicense) in implementing crypto-specific regulations but with fewer operational restrictions.
👉 Best practices for compliant crypto exchanges
Risk Disclosure: Cryptocurrency investments are volatile and high-risk. Capital is at risk—invest wisely.