23rd April 2023 > > Texas y'all.

tl;dr

Texas leads the fightback in the US against losing crypto tax dollars to the EU.

Market Snap (at time of writing)

Market Wrap

The Financial Times gleefully reports that the Ontario Teachers’ Pension Plan (a giant in the pensions industry) will now steer clear of crypto investments.

The fund lost $95mm on its investment in failed exchange FTX. Taking that much pain is bound to cause investment executives to pause and think.

Of course they could have simply invested in listed exchange Coinbase, with quarterly audited reports rather than an opaque off-shore version run by a bunch of kids, but who am I to raise doubts about the quality of the fund’s investment decision-making process.

Curious Cryptos’ Commentary - Texas

On Thursday, the Texas House of Representatives agreed the passing of what might be seen in the future as a seminal piece of legislation unpinning a cornerstone of the crypto industry:

https://digitalchamber.org/proof-of-reserves-bill-passes-texas-house-of-representatives/

Perianne Boring, Founder and CEO of the Chamber of Digital Commerce, explains:

“Congratulations to Rep. Giovanni Capriglione (R-TX) and the Texas House of Representatives on the passage of HB 1666, which seeks to protect Texas consumers’ investments in digital assets and addresses the critical issue of Proof of Reserves for exchanges. This legislation represents an essential step towards ensuring the stability and security of the digital asset market, and it is very promising to see this bill move forward.”

Any centralised crypto currency exchange registered within Texas will need to provide audited proof-of-reserves showing that all liabilities (i.e. customer deposits whether in fiat or crypto) are matched by assets (whether in fiat or crypto).

The fraudulent fiasco at FTX, which caused so much damage to the credibility of cryptos, centred on a misuse of customer funds diverted away from the exchange itself and into both the hedge fund Alameda Research, and the exceedingly deep pockets of the executives (if such a term can be applied to criminals) in charge of FTX and Alameda.

This legislation is aimed squarely at preventing a repeat of the FTX fraud. Serious and committed centralised crypto currency exchanges will want to set up operations in Texas, knowing that adhering to this new legislation will attract new customers to their business. As other states see tax dollars flow into Texas, one should expect this legislation to be repeated in all crypto-friendly states.

Crypto-maximalists don’t like it, but regulation is central to growing crypto adoption.