30.1 C
Dubai
Friday, May 24, 2024
HomeExchange NewsTexas Passes New Proof of Reserves Bill for Crypto Exchanges

Texas Passes New Proof of Reserves Bill for Crypto Exchanges

Date:

Related stories

The Texas House of Representatives has passed a bill saying that all crypto exchanges and related platforms must provide proof of reserves. This means that all trading companies must give regular proof that they have enough assets and currency in play to keep themselves afloat and to ensure all customers get their due funds should problems arise.

Texas Pushes for Stronger Crypto Regulations

The move is clearly a reaction to the FTX debacle, which occurred last November. FTX will likely go down as one of the biggest debacles of the digital currency space. The exchange – which first opened its doors for business in 2019 – rose to prominence three years later to become one of the top five digital currency trading platforms in the world. Its founder and chief executive Sam Bankman-Fried was lauded as a genius by many, and his net worth was in the billions towards the end of 2022.

Sadly, this reputation was short-lived as in mid-November, SBF complained of a liquidity crunch on social media. He said he needed fast cash to keep his business in operation, and he eventually turned to his biggest rival Binance about a possible buyout. While things appeared to be moving in that direction for some time, Binance eventually backed away from the deal, claiming the problems FTX was facing were simply too big for it to handle.

From there, the company filed bankruptcy and SBF resigned from his post. Things would have been bad enough if they had stopped there, but the trash meter kept rising. It was later discovered that SBF had utilized customer funds to invest in luxury Bahamian real estate and to pay off loans taken out by his other company Alameda Research. He was eventually arrested and extradited back to the United States. He has entered a not guilty plea and is awaiting trial at his parents’ California home.

Texas is a state that clearly takes crypto seriously. The state opened itself to all the digital currency miners that had to flee their native China after the country implemented rules that outlawed all digital currency mining. Texas is known for low-priced electricity and vast open regions, thus making it the perfect place for extraction operations.

Keeping Traders Safe

But it’s precisely because it takes crypto so seriously that it doesn’t want to see anyone get hurt, nor does it want to see investors lose their hard-earned money due to a few faulty or fraudulent activities from those in charge. Thus, all crypto exchanges that do business within Texas or with customers in the state must submit reports no later than 90 days after the start of each fiscal year showing what reserves they have in place.

Many believe the move will lead to more adoption of crypto and stronger legitimacy in the industry.

Nick Marinoff
Nick Marinoffhttps://www.livebitcoinnews.com/
Nick Marinoff is currently a lead news writer and editor for Money & Tech, a San Francisco-based broadcasting station that reports on all things digital currency-related. He has also written for a number of other online and print publications including Black Impact Magazine, EKT Interactive, Seal Beach USA and Benzinga.com, to name a few. He has recently published his first e-book "Take a 'Loan' Off Your Shoulders: 14 Simple Tricks for Graduating Debt Free" now available on Amazon. He is excited about the potential digital currency offers, particularly its ability to finance unbanked populations and bring nations together financially.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories