Texas Advances Groundbreaking Proof-of-Reserves Bill
Texas is on the verge of passing a landmark crypto regulation that would require exchanges to maintain full reserves to back customer funds. The bill, known as Texas House Bill 1666, passed the state Senate on May 15 and now awaits the governor’s signature before becoming law.
The legislation aims to enhance consumer protection by preventing crypto exchanges from commingling customer deposits with operational funds and ensuring that platforms hold sufficient reserves to meet withdrawal demands at all times.
Key Requirements for Crypto Service Providers
Under the proposed amendments to the Texas finance code, any digital asset provider serving more than 500 customers in the state and holding at least $10 million in customer funds will face new operational standards.
The bill prohibits exchanges from using customer funds for any purpose other than executing customer-initiated transactions. Companies will also need to submit an annual report within 90 days of each fiscal year’s end to the Texas Department of Banking, disclosing their liabilities to customers and confirming their reserve status.
Failure to comply could lead to a suspension or revocation of the company’s license.
Strengthening Consumer Confidence
By mandating proof of reserves, the Texas legislation seeks to ensure that crypto platforms remain solvent and transparent — a move that echoes the industry’s broader response to several high-profile exchange collapses in recent years.
Supporters of the bill argue that clear regulatory standards will help protect consumers while encouraging responsible innovation in the digital asset market.
Texas’ Proactive Approach to Crypto Regulation
Texas has emerged as one of the most crypto-engaged states in the U.S., balancing innovation with oversight. Earlier this year, the state Senate voted to reduce mining incentives, reflecting growing efforts to fine-tune the state’s relationship with the crypto industry.
At the same time, lawmakers voted to amend the Texas Bill of Rights to formally recognize individuals’ rights to “possess, retain, and utilize digital currencies.”
Toward a More Transparent Crypto Market
If signed into law, House Bill 1666 would make Texas one of the first U.S. states to implement comprehensive proof-of-reserves requirements for digital asset exchanges.
The move reflects a broader global trend toward stronger financial accountability in crypto markets — positioning Texas as a potential leader in establishing a more transparent, consumer-focused framework for digital assets.
