PROOF Act

This bill sets rules to better protect people’s digital assets on trading platforms. Exchanges must set basic accounting rules, keep customer assets safe and easy to access, and keep those assets separate from company funds, with only narrow exceptions for banking and settling normal trades. They also have to prove every month—through an independent review—that they hold enough assets to cover what customers are owed, and the Treasury Department will post these reports for the public to see.

If a platform breaks these rules or misses a monthly check, Treasury can fine it. Fines grow for repeat problems, are capped each year, and the names of platforms that fail will be published. Companies can appeal, and fines can be waived if the auditor—not the company—caused the problem; payment is paused during the appeal.

• Who is affected:
  • Digital exchanges and digital custodians, and the customers who keep assets with them.
• What changes:
  • Keep customer assets separate from company funds; do not use them to back other people’s trades. Limited exceptions allow banking or settling normal trades, or when a customer explicitly agrees.
  • Monthly independent “proof of reserves” checks, including proof of what the platform owes its customers; reports go to Treasury and are made public with the names of the platform and the auditor.
  • Penalties for noncompliance, public listing of platforms that fail, an appeals process, and a yearly cap on fines.
• When:
  • National accounting groups will set the audit standard with industry input; they aim to approve it within 18 months, with 6‑month extensions if needed. Monthly checks start within 30 days after that approval, and the audit section takes effect on that approval date.