Senators Thom Tillis (R-NC) and John Hickenlooper (D-Co reinstated Proving Reserve of Others Funds (Proof) ACT, which aims to prevent digital assets from gathering customer assets with corporate funds and strengthening the reserve transparency requirements.
The action, first introduced In October 2023, a two-party proposal that requires digital asset companies is undergoing monthly third party proof-of-reserves (POR) audits. The audits would verify that companies have sufficient assets to match customer liabilities, with results submitted to US Ministry of Finance and published.
Companies that do not meet would receive civilian fines, with increased penalties for repeated violations.
“The evidence law would improve the regulation of the cryptocurrency industry by explicitly prohibiting the collaboration of industry funds, while setting a strong transparency standard with the best-used industry’s best exercise of pores,” Senator Tillis said. “Combined, these two steps will help build confidence that investors, both institutional and retail, can get involved in digital asset markets.”
The bill was originally a response to November 2022 FTX -Collapesthe now notorious digital asset trading platform founded by the former-Crypto-Golden-Children-Turning Sam Banke-Fried. FTX’s downfall resulted in losses of approximately $ 8 billion to customers and $ 1.7 billion to investors, not to mention the knock-on effect on digital assetsPrecious 2022 ′ Crypto Winter. ‘
The FTX fiasco occurred when a huge hole in its balance sheet was revealed in early November 2022; A hole that had been paper over with its original token ftt. The largest holder of FTT, BinanceThen threatened to sell all its FTT -TOKENSWhich made the token’s award sink. This revealed the hole in FTX’s reserves and led to the exchange that is applied for bankruptcy.
In the aftermath it was discovered that FTX had “printed” more ftt to cover the significant losses from its sister company Alameda’s researchThe company’s investment arm, which had used customer funds to make risky investments that did not go out.
The Legal law Aims to prevent future disasters by standardizing the digital asset industry’s Solvency reporting practice and adopting pores as a legal requirement rather than a voluntary practice.
“The FTX failure was a direct result of misconduct and grossly unethical decision-making, which led to significant fraud and loss of investment funds,” Senator Tillis said. “Americans deserve better insurance about their deposits and the solvency on these platforms.”
Later Hickenlooper called the proposal’s provisions “associations” and emphasized that it would “make crypto companies more transparent and keep them according to the same standards as everyone else.”
The re -entry of the Act of Evidence comes in the midst of frenetic activity on the litter to produce clear regulation for the digital asset industry, with Stablecoin bills progresses in both the Senate and the House of Representatives and Discussions that are ongoing If the form that a broader digital asset frame would take.
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