The American senators Thom Tillis (R-R-NC) and John Hickenlooper (D-CO) have reintroduced a legislative measure to prevent digital asset guards from co-inventing customer funds with institutional or owner capital.
The bill, nicknamed the provocation law of other funds (proof), also requires third -party monthly inspections of childcare reserves, based on standards already used informally in the digital asset sector.
Initially introduced in 2023, the proof law was a response to the systemic failures exposed by the collapse of the exchange of Crypto FTX.
According to an extract from the reintroduced legislation, the implosion of the FTX was motivated by two operational defects: the co-native of customer assets with works funds and the embezzlement of customer deposits in Alameda Research, a related entity.
These practices contributed to a critical reserve deficit that left users without recourse when the platform failed, causing losses of more than $ 8 billion.
Backup requirements
The proof law offers two main requirements for digital asset exchanges and the guards. First, it would establish regulatory standards which explicitly prohibit the mixture of customer and institutional funds.
Second, it would force these platforms to undergo monthly inspections for proof of reservations (POR) carried out by a neutral third party, preferably a certified audit firm.
Under the provisions of the bill, the results of each inspection of the POR would be subject to the US Treasury Department, which would be responsible for the public disclosure of the conclusions.
The entities that do not comply are faced with civilian sanctions within the framework of a structure to apply the law, with repeated violations triggering intensified consequences.
The bill defines POR as a cryptographic method which allows exchanges and guardians to verify the support of assets for user deposits. Techniques such as Merkle trees or zero knowledge evidence allow these entities to demonstrate reserve assets without disclosing sensitive information.
The process is designed to maintain transparency while respecting the confidentiality and security of the platform and its users.
“Critical step”
Although several Crypto companies have voluntarily published reserve certificates since the collapse of the FTX, the proof law addresses the gaps of standardization and surveillance. The bill notes that many previous implementations were incoherent and lacked public accounting certified validation (CPA).
The proposal of Tillis and Hickenlooper seeks to move the practice of volunteer to compulsory, requiring a uniform reserve verification on platforms which hold digital assets. The legislation stresses that American users of Crypto exchanges deserve clear insurance on the solvency of guard institutions that hold their deposits.
ChainLink applauded the reintroduction of the bill on a post X, call him A “critical step towards establishing proof of reserve proof requirements for digital assets”.
The message added:
“While more real assets move, legislation such as the proof law reinforces the importance of proof of reservations and is essential to ensure the transparency of the digital asset industry.”
