Senators reintroduce PROOF Act to ban crypto fund co-mingling

American senators Thom Tillis and John Hickenlooper have reintroduced the reserve law of other reserves.

This act is a bipartite bill designed to prevent guards from the crypto co-lodging customer assets with company funds and to strengthen reserve transparency requirements.

Legislation, Presented for the first time In 2023, would require that the institutions of digital assets are subjected to monthly audits of proof of third party reserve.

These audits check that companies hold enough assets to correspond to customer liabilities. The results would be submitted to the US Treasury department and made public. Companies that do not comply are faced with the climbing of civil sanctions.

Post-FTX invoice

The bill responds to FTX collapsewho abused customers’ funds and lacked adequate reserves – factors that have led to billions of losses.

The law on evidence aims to normalize the practices of declaration of the solvency of the industry and to adopt the POR as a regulatory requirement rather than a voluntary practice.

Senator Tillis said that the bill “makes confidence” in the digital markets by combining a ban on funds with por transparency.

Hickenlooper qualified the measure as “common sense” and said that it would hold cryptographic companies according to the same standards as other financial institutions.

The reintroduction of the proof law comes in the midst of continuous efforts in Washington to create a complete regulatory framework for digital assets.