U.S. Senators Thom Tillis and John Hickenlooper have reintroduced the Proving Reserves of Others Funds Act (PROOF Act) to address concerns over crypto fund co-mingling following the FTX collapse. The bipartisan bill aims to bolster transparency and prevent another similar financial crisis. 💸 🔐
The legislation mandates monthly third-party proof-of-reserves audits for digital asset institutions, verifying the firms’ assets match customer liabilities. These results will be submitted to the U.S. Treasury Department for public disclosure. Non-compliant firms will face escalating civil penalties.
The PROOF Act follows a 2023 initial introduction by Senators Tillis and Hickenlooper. It seeks to ban crypto custodians from commingling customer funds and require mandatory reserve inspections, aiming to create trust in the industry.