88R10139 MLH-F
By: Parker S.B. No. 770
A BILL TO BE ENTITLED
AN ACT
relating to the commingling of funds by digital asset service
providers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
adding Chapter 160 to read as follows:
CHAPTER 160. DIGITAL ASSET SERVICE PROVIDERS
Sec. 160.001. DEFINITIONS. In this chapter:
(1) "Customer funds" means the digital assets, fiat
currency, or other property of a digital asset customer.
(2) "Department" means the Texas Department of
Banking.
(3) "Digital asset" means a natively electronic asset
that confers economic, proprietary, or access rights and is
recorded or stored in a blockchain, cryptographically secured
distributed ledger, or similar technology, and includes:
(A) a digital asset that the laws of any country
consider to be legal tender; or
(B) virtual currency as defined by Section
12.001, Business & Commerce Code.
(4) "Digital asset customer" means a person who
deposits fiat currency or a digital asset with a digital asset
service provider.
(5) "Digital asset service provider" means an
electronic platform that facilitates the trading of digital assets
on behalf of a digital asset customer and maintains custody of the
customer's digital assets.
Sec. 160.002. APPLICABILITY. (a) This chapter applies to a
digital asset service provider in this state that:
(1) serves more than 500 digital asset customers in
this state; or
(2) has at least $10 million in customer funds.
(b) This chapter does not apply to:
(1) a bank, as defined by Section 31.002;
(2) an institutional trading division or accredited
investor division of a digital asset service provider; or
(3) an institution excluded by rule from this chapter
by the banking commissioner of Texas.
Sec. 160.003. DUTIES OF DIGITAL ASSET SERVICE PROVIDERS.
(a) A digital asset service provider may not:
(1) commingle customer funds with funds belonging to
the digital asset service provider, including the digital asset
service provider's:
(A) operating capital;
(B) proprietary accounts;
(C) digital assets;
(D) fiat currency; or
(E) other property that is not customer funds;
(2) use customer funds to secure or guarantee a
transaction other than a transaction for the customer contributing
the funds;
(3) maintain customer funds in such a manner that a
digital asset customer may be unable to fully withdraw the
customer's funds; or
(4) invest in an obligation not listed under
Subsection (b)(2).
(b) In addition to any other requirements under state law, a
digital asset service provider shall maintain reserves in an amount
sufficient to fulfill all obligations to digital asset customers.
These reserves may be held:
(1) in a commingled account in which digital assets of
digital asset customers are not strictly segregated from each
other; or
(2) in the digital asset corresponding to the digital
asset customer's obligations or obligations issued or guaranteed by
a governmental entity listed in Section 2256.009, Government Code,
as applicable.
(c) A digital asset service provider shall create a plan to
allow:
(1) each digital asset customer to view at least
quarterly an accounting of:
(A) any outstanding liabilities owed to the
digital asset customer; and
(B) the digital asset customer's digital assets
held in reserve by the digital asset service provider; and
(2) an auditor to access and view at any time the
information made available to each digital asset customer under
Subdivision (1).
(d) Not later than the 90th day after the end of each fiscal
year, a digital asset service provider shall file a report with the
department. The report must include:
(1) an attestation by the digital asset service
provider of outstanding liability to digital asset customers,
documented using zero-knowledge encryption or a similar industry
standard;
(2) evidence of customer assets held by the person,
documented using zero-knowledge encryption or a similar industry
standard;
(3) a copy of the provider's plan under Subsection (c);
and
(4) an attestation by an auditor that the information
in the report is true and accurate.
Sec. 160.004. REQUIREMENTS FOR MONEY TRANSMISSION LICENSE.
(a) In addition to any other requirements under Subchapter D,
Chapter 151, a digital asset service provider must comply with the
requirements of this chapter to obtain and maintain any money
transmission license under Subchapter D, Chapter 151.
(b) The department may suspend and revoke a money
transmission license issued under Subchapter D, Chapter 151, to a
digital asset provider if the provider violates the requirements of
this chapter.
Sec. 160.005. RULES. The department may adopt rules
necessary to implement this chapter.
SECTION 2. This Act takes effect September 1, 2023.