AUSTIN, Texas — House Bill 1666, which regulates cryptocurrency digital asset providers, is on the governor's desk.
If you are one of the millions of Texans who have invested in cryptocurrency, odds are you have an app like Robinhood or Coinbase on your phone to exchange or invest in digital currency.
Cryptocurrency is relatively new, and a big concern with the industry is it's unregulated. HB 1666, by State Rep. Giovanni Capriglione (R-Southlake), would make sure your money isn't caught up in fraud and stolen by these companies.
We've seen it happen before with many digital asset providers, but notably what used to be one of the largest cryptocurrency exchange platforms, FTX. The leaders of that company are still facing litigation after being accused of taking billions of dollars from customers.
HB 1666 will require digital asset service providers to verify in a yearly report to the Department of Banking that they are:
- Maintaining reserves sufficient to fulfill their obligations to consumers;
- Ensuring customers are able to withdraw their funds at any time;
- Allowing consumers to view any outstanding liabilities owed to the digital asset customer and any assets held in custody by the digital asset service provider;
- Storing reserves in either an omnibus account where customers’ digital assets are not strictly segregated from each other or in the digital asset corresponding to customers’ obligations.
- Not commingling customer funds with funds belonging to the digital asset service provider.
The bill passed unanimously in both chambers.
"You will be comfortable knowing that when you invest online, when you're buying cryptos, when you're trading it, when you're selling, those assets are being watched, that they are being managed, and that there's an audit trail that protects those assets," Capriglione said.
Failure to comply would lead to punishments ranging from a loss of transmission license or criminal charges.
Capriglione said cryptocurrency is being regulated all over the world, but Texas would be the first state to regulate it in the U.S. He hopes the federal government will follow suit and lightly regulate cryptocurrency.
If Gov. Greg Abbott signs off on the bill, it will become law in 2024.