Bill · S. 1405· Senate(119-S-1405)
PROOF Act
- Introduced
- 4/10/2025
- Last activity
- 4/10/2025 — Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Sponsored by
- Thomas Tillis
- Cosponsors
- - 0 - 1
- Introduced
- In Committee
What this bill would do
The PROOF Act establishes strict requirements for digital exchanges and digital custodians regarding how they handle customer assets. Digital exchanges must implement baseline accounting standards to protect customer assets and minimize risks of loss or access delays. The bill prohibits the co-mingling of customer assets with the exchange's own assets, with limited exceptions. Additionally, these entities must obtain monthly attestations from independent auditing firms to provide proof of reserves. These reports must include cryptographic proof of assets and liabilities and be submitted to the Under Secretary of the Treasury. Failure to comply with these rules can result in significant civil penalties.
Yes· 3 of 5
Does this give people more protection from unfair business practices?+7
The bill enhances protection for digital asset users by requiring asset segregation and proof of reserves.
Does this make what the government does easier for the public to see?+6
The bill requires the public availability of digital exchange audit reports and compliance status.
Does this put more rules on large technology companies?+5
The bill imposes new regulatory and reporting requirements on digital asset exchanges.
The opposite
Would business owners be better off under this?-3
Digital exchange operators face new compliance costs and significant civil penalties for failures.
Who it would affect, and how
Potential Positive Impacts for People
-
Asset Protection: Digital exchanges are required to establish baseline accounting standards designed to ensure the safety of customer assets (Section 3(a)).
-
Reduced Risk of Loss: The law requires digital exchanges to hold customer assets in a way that minimizes the risk of the customer losing their assets (Section 3(b)(1)(A)).
-
Improved Access: Digital exchanges must hold assets in a manner that minimizes any delay in a customer accessing their assets (Section 3(b)(1)(B)).
-
Prevention of Co-mingling: The bill prohibits exchanges from co-mingling customer assets with their own assets or using customer assets to secure trades for other persons (Section 3(b)(2)(B)).
-
Transparency through Reporting: Auditing firms must provide reports including cryptographic proof of possession of keys and verification of reserves and liabilities, which the Under Secretary must make available to the public (Section 4(b)(1) and (2)).
Potential Negative Impacts for People
-
Civil Penalties for Entities: Digital exchanges and custodians that fail to meet attestation requirements face significant civil penalties, which are calculated based on the number of users or a percentage of assets under management (Section 4(c)(1)(A)).
-
Limited Financial Recourse during Disputes: While an entity can appeal a penalty, the bill specifies that the Under Secretary may only waive a penalty if the failure was caused by the auditing firm rather than the entity itself (Section 4(c)(3)(B)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Governance And Ideology
- Improves Government Transparency+6Increases Federal Power+4Improves Due Process+2
- Economy And Finance
- Improves Consumer Protection+7
- Education And Technology
- Increases Big Tech Regulation+5
- Demographic And Interest Groups
- Good For Business Owners-3
- 4/10/2025
- Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 1 Cosponsor added.
- Introduced in Senate
John HickenlooperDemocrat · Colorado