The Texas House of Representatives approved the digital asset service provider bill on April 20.
The bill received 148 votes in favor and zero against. Only one vote abstained.
Also known as the “Proof of Reserve” bill, HB 1666 was introduced in January by Giovanni Capriglione and aims to establish rules for exchanges and other companies providing crypto-related services.
It is now pending approval by the Senate and the Governor before it can officially become law.
HB 1666
Under the bill, a digital asset service provider (DASP) is defined as an “electronic platform that facilitates the trading of digital assets on behalf of a digital asset customer and maintains custody of the customer’s digital assets.”
Additionally, DASPs are companies that have more than 500 customers and over $10 million in customer funds.
If passed, the bill would mandate DASPs to hold customer funds in a reserve and regularly disclose these holdings to the Texas Banking Department. Companies will also have to disclose their liabilities owed to customers.
By mandating reserves and disclosures of these reserves, Texas intends to protect investors and customers from situations like FTX and Celsius, where customer funds became stuck when the companies collapsed.
Texas pushing for more rules
The Lone Star state has been one of the most active in terms of establishing regulation for the crypto industry in recent months, with lawmakers pushing multiple bills through the House.
Beyond HB 1666, the state is also reviewing a bill called SB 1751 that aims to remove benefits and subsidies for cryptocurrency miners and limit their participation in the state’s demand response program for electricity.
However, unlike the proof of reserves bill, SB 1751 has received significant pushback from the crypto industry for being too heavy-handed.
Crypto proponents claim the bill will adversely impact more than 20,000 rural jobs that were created by the mining industry in recent years and slow future growth.
Additionally, the bill is expected to raise the cost of key grid services for consumers if passed as miners currently provide these services at the lowest cost.
However, the lawmaker who introduced the bill believes the mining industry does not need state support to see continued growth.
