Texas 2025 - 89th Regular

Texas Senate Bill SB1705 Compare Versions

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Old	New	Differences
1	1	89R15162 PRL-D
2	2	By: Parker S.B. No. 1705
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7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the regulation of virtual currency kiosks.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
12	12	adding Chapter 161 to read as follows:
13	13	CHAPTER 161. VIRTUAL CURRENCY KIOSKS
14	14	Sec. 161.001. DEFINITIONS. In this chapter:
15	15	(1) "Blockchain analytics" means the analysis of data
16	16	from blockchains or public distributed ledgers, including
17	17	associated transaction information.
18	18	(2) "Blockchain analytics software" means a software
19	19	service that uses blockchain analytics data to provide
20	20	risk-specific information, including information relating to
21	21	virtual currency wallet addresses.
22	22	(3) "Department" means the Texas Department of
23	23	Licensing and Regulation.
24	24	(4) "Transaction hash" means a unique identifier made
25	25	up of a string of characters that act as a record of and provide
26	26	proof that the transaction was verified and added to the
27	27	blockchain.
28	28	(5) "Virtual currency" has the meaning assigned by
29	29	Section 12.001, Business & Commerce Code.
30	30	(6) "Virtual currency address" means an alphanumeric
31	31	identifier associated with a virtual currency wallet identifying
32	32	the location to which a virtual currency kiosk transaction can be
33	33	sent.
34	34	(7) "Virtual currency kiosk" means an electronic
35	35	terminal operated by a virtual currency kiosk operator to enable
36	36	the operator to facilitate the exchange of virtual currency for
37	37	money, bank credit, or other virtual currency, including by:
38	38	(A) connecting directly to a separate virtual
39	39	currency exchanger that performs the actual virtual currency
40	40	transmission; or
41	41	(B) drawing on the virtual currency in the
42	42	possession of the electronic terminal's operator.
43	43	(8) "Virtual currency kiosk operator" means a person
44	44	that engages in virtual currency business activity through a
45	45	virtual currency kiosk located in this state or a person that owns,
46	46	operates, or manages a virtual currency kiosk located in this state
47	47	through which virtual currency business activity is offered.
48	48	(9) "Virtual currency kiosk transaction" means a
49	49	transmission conducted or performed, wholly or partly, by
50	50	electronic means on a virtual currency kiosk, including a
51	51	transaction made at a virtual currency kiosk to purchase virtual
52	52	currency with fiat currency or to sell virtual currency for fiat
53	53	currency.
54	54	(10) "Virtual currency wallet" means a software
55	55	application or other mechanism providing a means to hold, store, or
56	56	transfer virtual currency.
57	57	Sec. 161.002. LICENSING AND REGISTRATION REQUIRED. (a) A
58	58	virtual currency kiosk operator may not conduct virtual currency
59	59	business activity in this state unless the operator holds a money
60	60	transmission license under Subchapter C, Chapter 152.
61	61	(b) A virtual currency kiosk operator may not locate, or
62	62	allow a third party to locate, a virtual currency kiosk in this
63	63	state unless the virtual currency kiosk operator:
64	64	(1) registers the kiosk with the department; and
65	65	(2) obtains the prior approval of the department for
66	66	the activation of the kiosk.
67	67	Sec. 161.003. REPORT REQUIRED. Not later than the 45th day
68	68	following the date of the end of a calendar quarter, a virtual
69	69	currency kiosk operator shall file with the department a report of
70	70	the location of each virtual currency kiosk of the operator in this
71	71	state. The report required under this section must include for each
72	72	virtual currency kiosk:
73	73	(1) company legal name;
74	74	(2) any fictitious or trade name;
75	75	(3) physical address;
76	76	(4) start date of operation of the virtual currency
77	77	kiosk at a location;
78	78	(5) end date of operation of the virtual currency
79	79	kiosk at a location, if applicable; and
80	80	(6) each virtual currency address associated with the
81	81	virtual currency kiosk.
82	82	Sec. 161.004. REQUESTS FOR KNOW YOUR CUSTOMER INFORMATION.
83	83	(a) Not later than 24 hours after receiving a written request from
84	84	a law enforcement agency, a virtual currency kiosk operator shall
85	85	provide to the agency the information required as "Know Your
86	86	Customer" information under Financial Industry Regulatory
87	87	Authority Rule 2090 as it existed on September 1, 2025.
88	88	(b) A release of information under Subsection (a) does not
89	89	require a subpoena or court order.
90	90	Sec. 161.005. DISCLOSURES ON MATERIAL RISK. (a) A virtual
91	91	currency kiosk operator in this state shall disclose in a clear,
92	92	conspicuous, and easily readable manner all material risks
93	93	generally associated with virtual currency, including that:
94	94	(1) virtual currency is not legal tender and is not
95	95	backed or insured by the government;
96	96	(2) accounts and value balances of virtual currency
97	97	are not subject to Federal Deposit Insurance Corporation, National
98	98	Credit Union Administration, or Securities Investor Protection
99	99	Corporation protections;
100	100	(3) some virtual currency kiosk transactions are
101	101	deemed to be made when recorded on a public ledger that may not be
102	102	the date or time when the person initiates the transaction;
103	103	(4) virtual currency's value may be derived from the
104	104	continued willingness of market participants to exchange fiat
105	105	currency for virtual currency, which may result in the permanent
106	106	and total loss of a particular virtual currency's value if the
107	107	market for virtual currency disappears;
108	108	(5) a person who accepts a virtual currency as payment
109	109	is not required to accept the currency as payment and may decline to
110	110	accept the currency in a future transaction;
111	111	(6) the volatility and unpredictability of the price
112	112	of virtual currency relative to fiat currency may result in a
113	113	significant loss in value over a short period;
114	114	(7) the nature of virtual currency means that any
115	115	technological difficulties experienced by a virtual currency kiosk
116	116	operator may prevent access to or use of the operator's customer's
117	117	virtual currency; and
118	118	(8) any bond maintained by the virtual currency kiosk
119	119	operator for the benefit of customers may not cover all losses
120	120	incurred by customers.
121	121	(b) In addition to the disclosures required under
122	122	Subsection (a), a virtual currency kiosk operator shall provide a
123	123	written disclosure that:
124	124	(1) is written prominently and in bold type and must be
125	125	acknowledged by the customer;
126	126	(2) is provided separately from the disclosures
127	127	required under Subsection (a); and
128	128	(3) states: "WARNING: LOSSES DUE TO FRAUDULENT OR
129	129	ACCIDENTAL TRANSACTIONS ARE NOT RECOVERABLE AND TRANSACTIONS IN
130	130	VIRTUAL CURRENCY ARE IRREVERSIBLE. VIRTUAL CURRENCY TRANSACTIONS
131	131	MAY BE USED TO STEAL YOUR MONEY BY CRIMINALS IMPERSONATING THE
132	132	GOVERNMENT, ORGANIZATIONS, OR YOUR LOVED ONES. THEY CAN THREATEN
133	133	JAIL TIME, SAY YOUR IDENTITY HAS BEEN STOLEN, ALLEGE YOUR COMPUTER
134	134	HAS BEEN HACKED, INSIST YOU WITHDRAW MONEY FROM YOUR BANK ACCOUNT TO
135	135	PURCHASE VIRTUAL CURRENCY, OR A NUMBER OF OTHER SCAMS. IF YOU
136	136	BELIEVE YOU ARE BEING SCAMMED, CALL YOUR LOCAL LAW ENFORCEMENT.".
137	137	(c) The disclosures required under Subsection (a) must be
138	138	displayed on the screen of the virtual currency kiosk with the
139	139	ability for a customer to acknowledge the receipt of the
140	140	disclosure.
141	141	Sec. 161.006. TRANSACTION-RELATED DISCLOSURES. (a) A
142	142	virtual currency kiosk operator shall disclose all relevant terms
143	143	generally associated with virtual currency and with the products,
144	144	services, and activities of the virtual currency kiosk operator,
145	145	including:
146	146	(1) the virtual currency kiosk operator's liability
147	147	for unauthorized virtual currency kiosk transactions;
148	148	(2) the customer's liability for unauthorized virtual
149	149	currency kiosk transactions;
150	150	(3) the customer's right to receive prior notice of a
151	151	change in the virtual currency kiosk operator's rules or policies;
152	152	and
153	153	(4) under what circumstances the virtual currency
154	154	kiosk operator, without a court or government order, is authorized
155	155	to disclose a customer's account information to third parties.
156	156	(b) Before a virtual currency kiosk transaction is entered
157	157	into for, on behalf of, or with a customer, a virtual currency kiosk
158	158	operator shall disclose the terms of the transaction in a clear,
159	159	conspicuous, and easily readable manner, including:
160	160	(1) the amount of the transaction denominated in:
161	161	(A) United States dollars; and
162	162	(B) the applicable virtual currency involved in
163	163	the transaction;
164	164	(2) any transaction fees, expenses, or charges,
165	165	including applicable exchange rates;
166	166	(3) the type and nature of the transaction;
167	167	(4) a warning that once completed, the transaction may
168	168	not be reversed;
169	169	(5) the daily virtual currency kiosk transaction limit
170	170	prescribed by Section 161.012; and
171	171	(6) any other disclosures that are customarily
172	172	provided in connection with a virtual currency kiosk transaction.
173	173	Sec. 161.007. ACKNOWLEDGMENT OF DISCLOSURES. Before
174	174	completing a transaction, a virtual currency kiosk operator shall
175	175	ensure that each customer who engages in a virtual currency kiosk
176	176	transaction using the operator's kiosk acknowledges receipt of all
177	177	disclosures required under this chapter by confirmation of consent.
178	178	Sec. 161.008. RECEIPT REQUIRED. After a transaction is
179	179	completed, the virtual currency kiosk operator shall provide the
180	180	customer with a physical receipt in the customer's preferred
181	181	language that contains:
182	182	(1) the virtual currency kiosk operator's name and
183	183	contact information, including a telephone number to answer
184	184	questions and register complaints;
185	185	(2) the type, value, date, and precise time of the
186	186	transaction, the transaction hash, and each applicable virtual
187	187	currency address;
188	188	(3) the name and contact information of the sender;
189	189	(4) the name and contact information of the designated
190	190	recipient;
191	191	(5) the fees charged;
192	192	(6) the exchange rate of the virtual currency to
193	193	United States dollars;
194	194	(7) a statement of the virtual currency kiosk
195	195	operator's liability for nondelivery or delayed delivery;
196	196	(8) a statement of the virtual currency kiosk
197	197	operator's refund policy; and
198	198	(9) any additional information the department may
199	199	require.
200	200	Sec. 161.009. PREVENTION OF FRAUDULENT ACTIVITY. A virtual
201	201	currency kiosk operator must use blockchain analytics software to
202	202	assist in the prevention of sending purchased virtual currency from
203	203	a virtual currency kiosk operator to a virtual currency wallet
204	204	known to be affiliated with fraudulent activity at the time of a
205	205	transaction. The department may request evidence from any virtual
206	206	currency kiosk operator of current use of blockchain analytics.
207	207	Sec. 161.010. FRAUD POLICY. A virtual currency kiosk
208	208	operator shall take reasonable steps to detect and prevent fraud,
209	209	including establishing and maintaining a written antifraud policy.
210	210	The policy required by this section shall, at a minimum, include:
211	211	(1) the identification and assessment of
212	212	fraud-related risk areas;
213	213	(2) procedures and controls to protect against
214	214	identified risks;
215	215	(3) allocation of responsibility for monitoring
216	216	risks; and
217	217	(4) procedures for the periodic evaluation and
218	218	revision of the antifraud procedures, controls, and monitoring
219	219	mechanisms.
220	220	Sec. 161.011. MEASURES TO ENSURE COMPLIANCE WITH LAWS. (a)
221	221	A virtual currency kiosk operator must designate and employ a
222	222	compliance officer who:
223	223	(1) is qualified to coordinate and monitor compliance
224	224	with the requirements of this chapter and as otherwise provided by
225	225	federal and state laws, rules, and regulations;
226	226	(2) is employed full-time by the virtual currency
227	227	kiosk operator; and
228	228	(3) does not own more than 20 percent of the virtual
229	229	currency kiosk operator.
230	230	(b) Any compliance responsibilities required under federal
231	231	or state laws, rules, and regulations shall be completed by the
232	232	full-time employees of the virtual currency kiosk operator.
233	233	Sec. 161.012. DAILY TRANSACTION LIMIT. A virtual currency
234	234	kiosk operator may not enter into a transaction or series of
235	235	transactions with a customer for a total amount having a value of
236	236	greater than $1,000 in a 24-hour period.
237	237	Sec. 161.013. PERMITTED FEES. The aggregate fees and
238	238	charges, directly or indirectly, charged to a customer related to a
239	239	single transaction or series of related transactions involving
240	240	virtual currency effected through a virtual currency kiosk in this
241	241	state, including any difference between the price charged to a
242	242	customer to buy, sell, exchange, or convert virtual currency and
243	243	the prevailing market value of the virtual currency at the time of
244	244	the transaction may not exceed the greater of:
245	245	(1) $5; or
246	246	(2) three percent of the United States dollar
247	247	equivalent of virtual currency involved in the transaction or
248	248	transactions.
249	249	Sec. 161.014. CUSTOMER SERVICE. A virtual currency kiosk
250	250	operator that conducts business in this state must:
251	251	(1) provide live customer service between the hours of
252	252	8 a.m. and 10 p.m. Monday through Friday; and
253	253	(2) display on the virtual currency kiosk or screen of
254	254	the kiosk:
255	255	(A) the customer service toll-free telephone
256	256	number;
257	257	(B) the name, address, and telephone number of
258	258	the operator; and
259	259	(C) the days on, time on, and method by which a
260	260	customer can contact the operator for assistance.
261	261	Sec. 161.015. SEIZURE. Any virtual currency kiosk of a
262	262	virtual currency kiosk operator may be seized if the operator fails
263	263	to comply with the requirements of this chapter.
264	264	Sec. 161.016. RULES. The department may adopt rules
265	265	necessary to implement, administer, and enforce this chapter.
266	266	SECTION 2. This Act takes effect September 1, 2025.