PROOF Act
Bipartisan Bill Requires Crypto Exchanges to Prove They Hold Customer Assets to Prevent Fraud
Stalled
No legislative action in over 90 days.
Legislative Progress
Key Points
- This bill requires cryptocurrency exchanges and companies that hold digital assets to prove they actually have the money their customers deposited. Every month, these companies must get an independent audit to show they have "proof of reserves," meaning they aren't just pretending to have the funds on hand.
- It protects everyday crypto investors by banning exchanges from mixing customer money with their own company funds. This practice has led to major market collapses in the past where companies spent customer money on their own business deals and then could not pay people back when they tried to withdraw.
- The goal is to make the crypto market safer and more transparent. By requiring these audit reports to be made public by the Treasury Department, investors can check for themselves if an exchange is being honest about its finances before they trust them with their savings.
- Companies that fail to provide these monthly reports will face fines. These penalties are based on how many customers the company has or how much total money they manage, ensuring that larger companies pay more if they break the rules.
- Before the rules start, accounting experts and the crypto industry will work together to create a formal standard for these audits. The new requirements will officially kick in once those professional standards are finalized and approved.
Impact Analysis
Personal Impact
Life & Work
Small crypto exchanges and digital custodians would face significant new compliance costs from monthly independent audits and reporting to Treasury. While larger exchanges may absorb these costs easily, smaller operators could struggle with the expense and administrative burden, potentially pushing some out of the market. However, those that comply gain credibility and customer trust.
Activities
Milestones
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
4 articles
Senators reintroduce legislation to tighten rules on crypto custody
U.S. Senators Thom Tillis and John Hickenlooper reintroduced the PROOF Act to prevent digital asset custodians from co-mingling customer funds. The bill mandates monthly third-party inspections of reserves, with results submitted to the Treasury Department for public disclosure.
United States senators reintroduce PROOF Act
The Proving Reserves of Others Funds (PROOF) Act aims to strengthen reserve transparency by requiring crypto firms to undergo monthly audits. Senator Tillis stated the bill would explicitly prohibit the co-mingling of funds, a direct response to the $8 billion loss seen in the FTX collapse.
Crypto’s Rules Are Here. 2026 Will Be About Making Them Work
As federal legislation like the GENIUS Act takes hold, proof-of-reserves reporting is becoming the de facto benchmark for the industry. New criteria outline core elements of compliant reports, including reconciliations between tokens outstanding and available redemption assets.
Source Information
Document Type
Congressional Bill
Official Title
PROOF Act
Data Sources
Sponsor
Cosponsors
(1)Analysis generated by AI. Always verify with official sources.