Texas 2023 - 88th Regular

Texas House Bill HB1666 Compare Versions

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Version 2 (New)

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1	1	H.B. No. 1666
2	2
3	3
4	4	AN ACT
5	5	relating to the commingling of funds by digital asset service
6	6	providers; providing an administrative penalty.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
9	9	adding Chapter 160 to read as follows:
10	10	CHAPTER 160. DIGITAL ASSET SERVICE PROVIDERS
11	11	Sec. 160.001. DEFINITIONS. In this chapter:
12	12	(1) "Commission" means the Finance Commission of
13	13	Texas.
14	14	(2) "Customer funds" means the digital assets, fiat
15	15	currency, or other property deposited by a digital asset customer.
16	16	(3) "Department" means the Texas Department of
17	17	Banking.
18	18	(4) "Digital asset" means a natively electronic asset
19	19	that confers economic, proprietary, or access rights and is
20	20	recorded or stored in a blockchain, cryptographically secured
21	21	distributed ledger, or similar technology, and includes:
22	22	(A) a digital asset that the laws of any country
23	23	consider to be legal tender; or
24	24	(B) virtual currency as defined by Section
25	25	12.001, Business & Commerce Code.
26	26	(5) "Digital asset customer" means a person who
27	27	deposits fiat currency or a digital asset with a digital asset
28	28	service provider.
29	29	(6) "Digital asset service provider" means an
30	30	electronic platform that facilitates the trading of digital assets
31	31	on behalf of a digital asset customer and maintains custody of the
32	32	customer's digital assets.
33	33	Sec. 160.002. ADMINISTRATION. The department shall
34	34	administer this chapter.
35	35	Sec. 160.003. APPLICABILITY. (a) This chapter applies to a
36	36	digital asset service provider doing business in this state that:
37	37	(1) holds a money transmission license under
38	38	Subchapter D, Chapter 151; and
39	39	(2) either:
40	40	(A) serves more than 500 digital asset customers
41	41	in this state; or
42	42	(B) has at least $10 million in customer funds.
43	43	(b) This chapter does not apply to:
44	44	(1) a bank, as defined by Section 31.002; or
45	45	(2) an entity excluded by commission rule or by order
46	46	of the banking commissioner based on a finding that the entity is:
47	47	(A) not required to hold a money transmission
48	48	license under Subchapter D, Chapter 151; or
49	49	(B) not subject to the requirements of this
50	50	chapter.
51	51	Sec. 160.004. DUTIES OF DIGITAL ASSET SERVICE PROVIDERS.
52	52	(a) Except as provided by this chapter, a digital asset service
53	53	provider may not:
54	54	(1) commingle customer funds with funds belonging to
55	55	the digital asset service provider, including the digital asset
56	56	service provider's:
57	57	(A) operating capital;
58	58	(B) proprietary accounts;
59	59	(C) digital assets;
60	60	(D) fiat currency; or
61	61	(E) other property that is not customer funds;
62	62	(2) use customer funds to secure or guarantee a
63	63	transaction other than a transaction for the customer contributing
64	64	the funds; or
65	65	(3) maintain customer funds in such a manner that a
66	66	digital asset customer may be unable to fully withdraw the
67	67	customer's funds.
68	68	(b) In addition to any other requirements under state law, a
69	69	digital asset service provider shall maintain customer funds not
70	70	subject to the requirements of Chapter 151:
71	71	(1) in separate accounts for obligations to each
72	72	digital asset customer; or
73	73	(2) in an omnibus account that only contains digital
74	74	assets of digital asset customers and in which digital assets of
75	75	digital asset customers are not strictly segregated from each
76	76	other.
77	77	(c) A digital asset service provider shall create a plan to
78	78	allow:
79	79	(1) each digital asset customer to view at least
80	80	quarterly an accounting of:
81	81	(A) any outstanding liabilities owed to the
82	82	digital asset customer; and
83	83	(B) the digital asset customer's digital assets
84	84	held in custody by the digital asset service provider; and
85	85	(2) an auditor to access and view at any time a
86	86	pseudonymized version of the information made available to each
87	87	digital asset customer under Subdivision (1).
88	88	(d) Not later than the 90th day after the end of each fiscal
89	89	year, a digital asset service provider shall file a report with the
90	90	department. The report must include the following information, as
91	91	of the end of the digital asset service provider's fiscal year:
92	92	(1) an attestation by the digital asset service
93	93	provider of outstanding liability to digital asset customers;
94	94	(2) evidence of customer assets held by the provider;
95	95	(3) a copy of the provider's plan under Subsection (c);
96	96	and
97	97	(4) an attestation by an auditor that the information
98	98	in the report is true and accurate.
99	99	(e) An auditor fulfilling the requirements of this section
100	100	must:
101	101	(1) be an independent certified public accountant
102	102	licensed in the United States; and
103	103	(2) apply attestation standards adopted by the
104	104	American Institute of Certified Public Accountants.
105	105	(f) A digital asset service provider may meet the
106	106	requirements of Subsections (c)(2), (d)(1), (d)(2), and (d)(4) by
107	107	filing with the department a copy of:
108	108	(1) an audit of the digital asset service provider
109	109	performed in accordance with the Sarbanes-Oxley Act of 2002 (15
110	110	U.S.C. Section 7201 et seq.) or regulations adopted under that Act;
111	111	or
112	112	(2) an audit of the digital asset service provider's
113	113	parent company that includes an audit of the digital service
114	114	provider performed in accordance with the Sarbanes-Oxley Act of
115	115	2002 (15 U.S.C. Section 7201 et seq.) or regulations adopted under
116	116	that Act.
117	117	(g) A digital asset service provider may include an amount
118	118	of funds, assets, or property belonging to the digital asset
119	119	service provider with customer funds for the purpose of
120	120	facilitating trade and operational needs to provide digital asset
121	121	services. That amount of funds, assets, or other property
122	122	belonging to the digital asset service provider is considered and
123	123	shall be treated as customer funds. A digital asset service
124	124	provider may only withdraw or assert a claim on that amount to the
125	125	extent that amount exceeds the amount deposited with the digital
126	126	asset service provider by or for digital asset customers.
127	127	(h) The commissioner may waive a requirement of this section
128	128	or allow a digital asset service provider to submit alternative
129	129	information to satisfy a requirement of this section if the
130	130	commissioner determines that the waiver or alternative information
131	131	is consistent with the purposes of this chapter and in the best
132	132	interest of the public.
133	133	Sec. 160.005. REQUIREMENTS FOR MONEY TRANSMISSION LICENSE.
134	134	(a) In addition to any other requirements under Subchapter D,
135	135	Chapter 151, a digital asset service provider must comply with the
136	136	requirements of this chapter to obtain and maintain any money
137	137	transmission license under Subchapter D, Chapter 151. A digital
138	138	asset service provider applying for a new money transmission
139	139	license under Subchapter D, Chapter 151, must submit to the
140	140	department the report required by Section 160.004(d).
141	141	(b) The department may suspend and revoke a money
142	142	transmission license issued under Subchapter D, Chapter 151, to a
143	143	digital asset service provider if the provider violates the
144	144	requirements of this chapter.
145	145	(c) The department may impose any penalty under Subchapter
146	146	H, Chapter 151, that the department may impose on a person who
147	147	violates that chapter on a digital asset service provider who
148	148	violates this chapter.
149	149	(d) The commissioner may examine a digital asset service
150	150	provider in the same manner as allowed under Subchapter G, Chapter
151	151	151. Information disclosed to the commissioner in connection with
152	152	an examination under this section is confidential information and
153	153	subject to the provisions regarding confidentiality under
154	154	Subchapter G, Chapter 151.
155	155	Sec. 160.006. RULES. The commission may adopt rules to
156	156	administer and enforce this chapter, including rules necessary and
157	157	appropriate to implement and clarify this chapter.
158	158	SECTION 2. This Act takes effect September 1, 2023.
159	159	______________________________ ______________________________
160	160	President of the Senate Speaker of the House
161	161	I certify that H.B. No. 1666 was passed by the House on April
162	162	20, 2023, by the following vote: Yeas 148, Nays 0, 1 present, not
163	163	voting; and that the House concurred in Senate amendments to H.B.
164	164	No. 1666 on May 17, 2023, by the following vote: Yeas 145, Nays 0,
165	165	1 present, not voting.
166	166	______________________________
167	167	Chief Clerk of the House
168	168	I certify that H.B. No. 1666 was passed by the Senate, with
169	169	amendments, on May 15, 2023, by the following vote: Yeas 31, Nays
170	170	0.
171	171	______________________________
172	172	Secretary of the Senate
173	173	APPROVED: __________________
174	174	Date
175	175	__________________
176	176	Governor