S.1405

The PROOF Act mandates digital exchanges to establish accounting standards and procedures to safeguard customer assets.

The PROOF Act, or Proving Reserves Of Others’ Funds Act, requires digital exchanges to establish baseline accounting standards and procedures designed to protect and ensure the safety of customer assets. It mandates digital exchanges to hold customer assets in a manner that minimizes the risk of loss and prohibits them from using customer assets for margining, securing, or guaranteeing trades or accounts of others. The act also requires digital exchanges to obtain monthly attestations from independent auditing firms to verify proof of reserves and cryptographic proof of customer assets.