Texas bill could introduce rules to the cryptocurrency market to protect investors

HB 1666, filed by Republican State Representative Giovanni Capriglione, aims to restore market confidence by requiring proof of reserve for cryptocurrency exchanges, etc.

Austin, Texas. House Bill 166 will make some adjustments to the unregulated cryptocurrency market in Texas to protect investors with a digital asset exchange.

Some well-known digital asset service providers are CoinBase, Cash App, and Kraken.

The bill, introduced by Republican state representative Giovanni Capriglione, aims to prevent the loss of customer funds, as happened with the FTX Exchange.

“We need to restore the reputation of this industry by identifying best practices,” said Lee Bratcher, president of the Texas Blockchain Council.

These best practices are aimed at tackling the industry’s fraud problems, especially after FTX, one of the largest cryptocurrency exchanges, collapsed due to a lack of funds to pay out investors. Now he is accused of taking billions from his clients.

“Using client funds for a variety of purposes,” Bratcher said, “is frustrating. It’s a failure.”

To prevent this from happening to Texans again, Bratcher supports House Bill 1666, introduced by Rep. Capriglione.

“Everyone thinks that if you are a buyer, you should be able to find out what you have, what has not been taken from you,” Capriglione said.

• Require digital asset exchanges to confirm that they have sufficient reserve funds to pay customers.
• Ban exchanges from mixing consumer funds with company assets.
• Request an independent audit with reports submitted to the Texas Department of Banking.

These are all the things FTX is accused of.

“We are working on common sense rules and this bill will try to solve the biggest problems while allowing these technologies and innovations to flourish in Texas,” Capriglione said.

Capriglione said he has received some resistance, but he has also seen a shift in an industry that wants to provide guarantees to customers.

“So we actually saw more and more people saying, ‘Hey, we got it,'” Capriglione said. “Free movement and all that stuff has led to a lot of innovative changes, but we’re going to need someone to keep bad actors out, and that’s what we’re going to try to do.”

A similar bill was introduced in the Texas Senate, SB 770.

If either of the bills passes, it will be the first of its kind in the country, Capriglione said.

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