Senators reintroduce legislation to tighten rules on crypto custody
US Senators Thom Tillis (R-NC) and John Hickenlooper (D-CO) have reintroduced a legislative measure to prevent digital asset custodians from co-mingling customer funds with institutional or proprietary capital.
The bill, dubbed the Proving Reserves of Others Funds (PROOF) Act, also mandates monthly third-party inspections of custodial reserves, building on standards already used informally across the digital asset sector.
Initially introduced in 2023, the PROOF Act was a response to systemic failures exposed by the collapse of the crypto exchange FTX.
According to an excerpt from the reintroduced legislation, FTX’s implosion was driven by two operational flaws: the co-mingling of customer assets with corporate funds and the diversion…
