U.S. Senators Reintroduce PROOF Act for Crypto Regulation
U.S. Senators Thom Tillis and John Hickenlooper have reintroduced the Proving Reserves of Others Funds Act. This bipartisan bill aims to prevent crypto custodians from mixing customer assets with company funds.It also seeks to enhance reserve openness.
The PROOF Act, first introduced in 2023, requires digital asset firms to undergo monthly third-party audits. These audits ensure that companies hold enough assets to cover customer liabilities. Results will be sent to the U.S. Treasury and made public. Non-compliance will lead to penalties.
The bill bans crypto custodians from co-mingling customer funds. It mandates monthly reserve inspections.This measure responds to the FTX collapse, which led to billions in losses due to misused customer funds and inadequate reserves.
the PROOF Act aims to standardize solvency reporting in the crypto industry. It makes proof-of-reserves (PoR) a regulatory requirement,not a voluntary practice. Senator Tillis believes this will build trust in digital markets.Hickenlooper calls it a commonsense measure, holding crypto firms to the same standards as traditional financial institutions.
This reintroduction comes as Washington continues to develop a thorough regulatory framework for digital assets. The PROOF Act is a step towards preventing another FTX situation.
