PROOF Act
Sponsored By: Senator Sen. Tillis, Thomas [R-NC]
Introduced
Summary
Reserve transparency for customer assets. This bill would create a federal framework requiring digital exchanges and custodians to produce cryptographic-proof attestations that they hold customer assets and to face tiered penalties for failures.
Show full summary
- Customers: Retail users would get publicly available reports that verify possession or control of keys and balances using cryptographic proofs like Merkle trees or zero-knowledge proofs.
- Exchanges and custodians: Platforms would need an independent attestation within 30 days of the rule taking effect and then monthly attestations, with a disinterested third party allowed if independent auditors are unavailable.
- Auditors and regulators: Auditing firms must submit reports to the Treasury Office of Domestic Finance that the Office will publish with entity and auditor names. Civil penalties would range from $0.25 to $0.90 per user or 2.5 to 9 basis points of assets under management, with annual caps at the lesser of $1 per user or 0.1% of assets. Penalties would be publicized and appealable, and waivers are possible if an auditor caused the noncompliance.
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Bill Overview
Analyzed Economic Effects
4 provisions identified: 1 benefits, 1 costs, 2 mixed.
Fines for missed attestation reports
If enacted, the Under Secretary could fine exchanges that miss attestation or reporting duties. For one failure the fine would be the larger of $0.25 per user or 2.5 basis points of assets under management. For two failures it would be $0.55 per user or 5.5 basis points. For three or more it would be $0.90 per user or 9 basis points. Annual fines could not exceed the smaller of $1 per user or 10 basis points of assets. The Under Secretary must publish names of failing firms and provide an appeals process, including waiving fines if an auditor caused the failure and pausing payment while appeals are pending.
Defines digital assets and firms
This bill would define which digital assets, commodities, wallets, custodians, and exchanges are covered. It would say that "covered assets" exclude an exchange's own funds and margin-account assets. It would say money includes foreign currency and convertible virtual currency. It would also define the Treasury Office and Under Secretary used in the bill.
Monthly proof-of-reserves and reports
The bill would require each exchange and custodian to get an independent attestation of proof of reserves within 30 days after an industry standard is approved, and then monthly. Auditors must send cryptographic proof reports to the Treasury Under Secretary and those reports would be published with the firm names. If no independent auditor is available, a disinterested third party could do the work under the same rules. The PCAOB and AICPA would request industry proposals within 90 days and aim to approve a standard within 18 months, with 180-day extensions if needed.
New protections for customer assets
If enacted, exchanges would have to hold customer covered assets to reduce loss and speed access. They could not treat those assets as their own or mix them with non-covered funds. Limited exceptions would allow short-term convenience co-mingling with banks or custodians, ordinary withdrawals to pay fees or settle trades, or swaps with a customer's clear consent. Assets in margin accounts would not be treated as covered assets.
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Sponsors & CoSponsors
Sponsor
Sen. Tillis, Thomas [R-NC]
NC • R
Cosponsors
John Hickenlooper
CO • D
Sponsored 4/10/2025
Roll Call Votes
No roll call votes available for this bill.
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