Texas 2023 - 88th Regular

Texas Senate Bill SB770 Compare Versions

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1	1	88R10139 MLH-F
2	2	By: Parker S.B. No. 770
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the commingling of funds by digital asset service
8	8	providers.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
11	11	adding Chapter 160 to read as follows:
12	12	CHAPTER 160. DIGITAL ASSET SERVICE PROVIDERS
13	13	Sec. 160.001. DEFINITIONS. In this chapter:
14	14	(1) "Customer funds" means the digital assets, fiat
15	15	currency, or other property of a digital asset customer.
16	16	(2) "Department" means the Texas Department of
17	17	Banking.
18	18	(3) "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	(4) "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	(5) "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. APPLICABILITY. (a) This chapter applies to a
34	34	digital asset service provider in this state that:
35	35	(1) serves more than 500 digital asset customers in
36	36	this state; or
37	37	(2) has at least $10 million in customer funds.
38	38	(b) This chapter does not apply to:
39	39	(1) a bank, as defined by Section 31.002;
40	40	(2) an institutional trading division or accredited
41	41	investor division of a digital asset service provider; or
42	42	(3) an institution excluded by rule from this chapter
43	43	by the banking commissioner of Texas.
44	44	Sec. 160.003. DUTIES OF DIGITAL ASSET SERVICE PROVIDERS.
45	45	(a) A digital asset service provider may not:
46	46	(1) commingle customer funds with funds belonging to
47	47	the digital asset service provider, including the digital asset
48	48	service provider's:
49	49	(A) operating capital;
50	50	(B) proprietary accounts;
51	51	(C) digital assets;
52	52	(D) fiat currency; or
53	53	(E) other property that is not customer funds;
54	54	(2) use customer funds to secure or guarantee a
55	55	transaction other than a transaction for the customer contributing
56	56	the funds;
57	57	(3) maintain customer funds in such a manner that a
58	58	digital asset customer may be unable to fully withdraw the
59	59	customer's funds; or
60	60	(4) invest in an obligation not listed under
61	61	Subsection (b)(2).
62	62	(b) In addition to any other requirements under state law, a
63	63	digital asset service provider shall maintain reserves in an amount
64	64	sufficient to fulfill all obligations to digital asset customers.
65	65	These reserves may be held:
66	66	(1) in a commingled account in which digital assets of
67	67	digital asset customers are not strictly segregated from each
68	68	other; or
69	69	(2) in the digital asset corresponding to the digital
70	70	asset customer's obligations or obligations issued or guaranteed by
71	71	a governmental entity listed in Section 2256.009, Government Code,
72	72	as applicable.
73	73	(c) A digital asset service provider shall create a plan to
74	74	allow:
75	75	(1) each digital asset customer to view at least
76	76	quarterly an accounting of:
77	77	(A) any outstanding liabilities owed to the
78	78	digital asset customer; and
79	79	(B) the digital asset customer's digital assets
80	80	held in reserve by the digital asset service provider; and
81	81	(2) an auditor to access and view at any time the
82	82	information made available to each digital asset customer under
83	83	Subdivision (1).
84	84	(d) Not later than the 90th day after the end of each fiscal
85	85	year, a digital asset service provider shall file a report with the
86	86	department. The report must include:
87	87	(1) an attestation by the digital asset service
88	88	provider of outstanding liability to digital asset customers,
89	89	documented using zero-knowledge encryption or a similar industry
90	90	standard;
91	91	(2) evidence of customer assets held by the person,
92	92	documented using zero-knowledge encryption or a similar industry
93	93	standard;
94	94	(3) a copy of the provider's plan under Subsection (c);
95	95	and
96	96	(4) an attestation by an auditor that the information
97	97	in the report is true and accurate.
98	98	Sec. 160.004. REQUIREMENTS FOR MONEY TRANSMISSION LICENSE.
99	99	(a) In addition to any other requirements under Subchapter D,
100	100	Chapter 151, a digital asset service provider must comply with the
101	101	requirements of this chapter to obtain and maintain any money
102	102	transmission license under Subchapter D, Chapter 151.
103	103	(b) The department may suspend and revoke a money
104	104	transmission license issued under Subchapter D, Chapter 151, to a
105	105	digital asset provider if the provider violates the requirements of
106	106	this chapter.
107	107	Sec. 160.005. RULES. The department may adopt rules
108	108	necessary to implement this chapter.
109	109	SECTION 2. This Act takes effect September 1, 2023.