PROOF Act Proving Reserves Of Others’ Funds Act
If enacted, SB3087 will significantly alter the landscape of financial regulation for digital exchanges. It explicitly requires these entities to segregate customer assets from their operational funds, prohibiting the co-mingling of assets. Furthermore, each digital exchange must hold the covered assets in a manner that maximizes security and reduces potential access delays for customers. The Under Secretary of the Treasury will oversee the enforcement of these standards, which includes imposing civil penalties on exchanges that fail to comply with the established requirements.
SB3087, also known as the PROOF Act (Proving Reserves Of Others’ Funds Act), aims to impose stringent requirements on digital exchanges regarding the treatment of customer assets. This bill addresses long-standing concerns about the safety and transparency of digital assets by mandating that digital exchanges and custodians implement baseline accounting standards and procedures. The legislation seeks to reassure customers that their assets are safeguarded and handled properly, minimizing the risk of loss and ensuring timely access to their funds.
While supporters of the bill argue that it will enhance consumer protection and instill greater confidence in digital financial markets, critics contend that the additional regulatory burdens may stifle innovation and competitiveness within the sector. There is also concern regarding the feasibility of the new audit requirements, particularly for smaller exchanges that may struggle to meet the high standards stipulated by the legislation. The bill mandates monthly attestations from independent auditors, requiring each exchange to present proof of reserves, further intensifying the compliance pressure on these platforms.