89R15162 PRL-D

By: Parker S.B. No. 1705

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of virtual currency kiosks.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle E, Title 3, Finance Code, is amended by adding Chapter 161 to read as follows:

CHAPTER 161. VIRTUAL CURRENCY KIOSKS

Sec. 161.001. DEFINITIONS. In this chapter:

(1) "Blockchain analytics" means the analysis of data from blockchains or public distributed ledgers, including associated transaction information.

(2) "Blockchain analytics software" means a software service that uses blockchain analytics data to provide risk-specific information, including information relating to virtual currency wallet addresses.

(3) "Department" means the Texas Department of Licensing and Regulation.

(4) "Transaction hash" means a unique identifier made up of a string of characters that act as a record of and provide proof that the transaction was verified and added to the blockchain.

(5) "Virtual currency" has the meaning assigned by Section 12.001, Business & Commerce Code.

(6) "Virtual currency address" means an alphanumeric identifier associated with a virtual currency wallet identifying the location to which a virtual currency kiosk transaction can be sent.

(7) "Virtual currency kiosk" means an electronic terminal operated by a virtual currency kiosk operator to enable the operator to facilitate the exchange of virtual currency for money, bank credit, or other virtual currency, including by:

(A) connecting directly to a separate virtual currency exchanger that performs the actual virtual currency transmission; or

(B) drawing on the virtual currency in the possession of the electronic terminal's operator.

(8) "Virtual currency kiosk operator" means a person that engages in virtual currency business activity through a virtual currency kiosk located in this state or a person that owns, operates, or manages a virtual currency kiosk located in this state through which virtual currency business activity is offered.

(9) "Virtual currency kiosk transaction" means a transmission conducted or performed, wholly or partly, by electronic means on a virtual currency kiosk, including a transaction made at a virtual currency kiosk to purchase virtual currency with fiat currency or to sell virtual currency for fiat currency.

(10) "Virtual currency wallet" means a software application or other mechanism providing a means to hold, store, or transfer virtual currency.

Sec. 161.002. LICENSING AND REGISTRATION REQUIRED. (a) A virtual currency kiosk operator may not conduct virtual currency business activity in this state unless the operator holds a money transmission license under Subchapter C, Chapter 152.

(b) A virtual currency kiosk operator may not locate, or allow a third party to locate, a virtual currency kiosk in this state unless the virtual currency kiosk operator:

(1) registers the kiosk with the department; and

(2) obtains the prior approval of the department for the activation of the kiosk.

Sec. 161.003. REPORT REQUIRED. Not later than the 45th day following the date of the end of a calendar quarter, a virtual currency kiosk operator shall file with the department a report of the location of each virtual currency kiosk of the operator in this state. The report required under this section must include for each virtual currency kiosk:

(1) company legal name;

(2) any fictitious or trade name;

(3) physical address;

(4) start date of operation of the virtual currency kiosk at a location;

(5) end date of operation of the virtual currency kiosk at a location, if applicable; and

(6) each virtual currency address associated with the virtual currency kiosk.

Sec. 161.004. REQUESTS FOR KNOW YOUR CUSTOMER INFORMATION. (a) Not later than 24 hours after receiving a written request from a law enforcement agency, a virtual currency kiosk operator shall provide to the agency the information required as "Know Your Customer" information under Financial Industry Regulatory Authority Rule 2090 as it existed on September 1, 2025.

(b) A release of information under Subsection (a) does not require a subpoena or court order.

Sec. 161.005. DISCLOSURES ON MATERIAL RISK. (a) A virtual currency kiosk operator in this state shall disclose in a clear, conspicuous, and easily readable manner all material risks generally associated with virtual currency, including that:

(1) virtual currency is not legal tender and is not backed or insured by the government;

(2) accounts and value balances of virtual currency are not subject to Federal Deposit Insurance Corporation, National Credit Union Administration, or Securities Investor Protection Corporation protections;

(3) some virtual currency kiosk transactions are deemed to be made when recorded on a public ledger that may not be the date or time when the person initiates the transaction;

(4) virtual currency's value may be derived from the continued willingness of market participants to exchange fiat currency for virtual currency, which may result in the permanent and total loss of a particular virtual currency's value if the market for virtual currency disappears;

(5) a person who accepts a virtual currency as payment is not required to accept the currency as payment and may decline to accept the currency in a future transaction;

(6) the volatility and unpredictability of the price of virtual currency relative to fiat currency may result in a significant loss in value over a short period;

(7) the nature of virtual currency means that any technological difficulties experienced by a virtual currency kiosk operator may prevent access to or use of the operator's customer's virtual currency; and

(8) any bond maintained by the virtual currency kiosk operator for the benefit of customers may not cover all losses incurred by customers.

(b) In addition to the disclosures required under Subsection (a), a virtual currency kiosk operator shall provide a written disclosure that:

(1) is written prominently and in bold type and must be acknowledged by the customer;

(2) is provided separately from the disclosures required under Subsection (a); and

(3) states: "WARNING: LOSSES DUE TO FRAUDULENT OR ACCIDENTAL TRANSACTIONS ARE NOT RECOVERABLE AND TRANSACTIONS IN VIRTUAL CURRENCY ARE IRREVERSIBLE. VIRTUAL CURRENCY TRANSACTIONS MAY BE USED TO STEAL YOUR MONEY BY CRIMINALS IMPERSONATING THE GOVERNMENT, ORGANIZATIONS, OR YOUR LOVED ONES. THEY CAN THREATEN JAIL TIME, SAY YOUR IDENTITY HAS BEEN STOLEN, ALLEGE YOUR COMPUTER HAS BEEN HACKED, INSIST YOU WITHDRAW MONEY FROM YOUR BANK ACCOUNT TO PURCHASE VIRTUAL CURRENCY, OR A NUMBER OF OTHER SCAMS. IF YOU BELIEVE YOU ARE BEING SCAMMED, CALL YOUR LOCAL LAW ENFORCEMENT.".

(c) The disclosures required under Subsection (a) must be displayed on the screen of the virtual currency kiosk with the ability for a customer to acknowledge the receipt of the disclosure.

Sec. 161.006. TRANSACTION-RELATED DISCLOSURES. (a) A virtual currency kiosk operator shall disclose all relevant terms generally associated with virtual currency and with the products, services, and activities of the virtual currency kiosk operator, including:

(1) the virtual currency kiosk operator's liability for unauthorized virtual currency kiosk transactions;

(2) the customer's liability for unauthorized virtual currency kiosk transactions;

(3) the customer's right to receive prior notice of a change in the virtual currency kiosk operator's rules or policies; and

(4) under what circumstances the virtual currency kiosk operator, without a court or government order, is authorized to disclose a customer's account information to third parties.

(b) Before a virtual currency kiosk transaction is entered into for, on behalf of, or with a customer, a virtual currency kiosk operator shall disclose the terms of the transaction in a clear, conspicuous, and easily readable manner, including:

(1) the amount of the transaction denominated in:

(A) United States dollars; and

(B) the applicable virtual currency involved in the transaction;

(2) any transaction fees, expenses, or charges, including applicable exchange rates;

(3) the type and nature of the transaction;

(4) a warning that once completed, the transaction may not be reversed;

(5) the daily virtual currency kiosk transaction limit prescribed by Section 161.012; and

(6) any other disclosures that are customarily provided in connection with a virtual currency kiosk transaction.

Sec. 161.007. ACKNOWLEDGMENT OF DISCLOSURES. Before completing a transaction, a virtual currency kiosk operator shall ensure that each customer who engages in a virtual currency kiosk transaction using the operator's kiosk acknowledges receipt of all disclosures required under this chapter by confirmation of consent.

Sec. 161.008. RECEIPT REQUIRED. After a transaction is completed, the virtual currency kiosk operator shall provide the customer with a physical receipt in the customer's preferred language that contains:

(1) the virtual currency kiosk operator's name and contact information, including a telephone number to answer questions and register complaints;

(2) the type, value, date, and precise time of the transaction, the transaction hash, and each applicable virtual currency address;

(3) the name and contact information of the sender;

(4) the name and contact information of the designated recipient;

(5) the fees charged;

(6) the exchange rate of the virtual currency to United States dollars;

(7) a statement of the virtual currency kiosk operator's liability for nondelivery or delayed delivery;

(8) a statement of the virtual currency kiosk operator's refund policy; and

(9) any additional information the department may require.

Sec. 161.009. PREVENTION OF FRAUDULENT ACTIVITY. A virtual currency kiosk operator must use blockchain analytics software to assist in the prevention of sending purchased virtual currency from a virtual currency kiosk operator to a virtual currency wallet known to be affiliated with fraudulent activity at the time of a transaction. The department may request evidence from any virtual currency kiosk operator of current use of blockchain analytics.

Sec. 161.010. FRAUD POLICY. A virtual currency kiosk operator shall take reasonable steps to detect and prevent fraud, including establishing and maintaining a written antifraud policy. The policy required by this section shall, at a minimum, include:

(1) the identification and assessment of fraud-related risk areas;

(2) procedures and controls to protect against identified risks;

(3) allocation of responsibility for monitoring risks; and

(4) procedures for the periodic evaluation and revision of the antifraud procedures, controls, and monitoring mechanisms.

Sec. 161.011. MEASURES TO ENSURE COMPLIANCE WITH LAWS. (a) A virtual currency kiosk operator must designate and employ a compliance officer who:

(1) is qualified to coordinate and monitor compliance with the requirements of this chapter and as otherwise provided by federal and state laws, rules, and regulations;

(2) is employed full-time by the virtual currency kiosk operator; and

(3) does not own more than 20 percent of the virtual currency kiosk operator.

(b) Any compliance responsibilities required under federal or state laws, rules, and regulations shall be completed by the full-time employees of the virtual currency kiosk operator.

Sec. 161.012. DAILY TRANSACTION LIMIT. A virtual currency kiosk operator may not enter into a transaction or series of transactions with a customer for a total amount having a value of greater than $1,000 in a 24-hour period.

Sec. 161.013. PERMITTED FEES. The aggregate fees and charges, directly or indirectly, charged to a customer related to a single transaction or series of related transactions involving virtual currency effected through a virtual currency kiosk in this state, including any difference between the price charged to a customer to buy, sell, exchange, or convert virtual currency and the prevailing market value of the virtual currency at the time of the transaction may not exceed the greater of:

(1) $5; or

(2) three percent of the United States dollar equivalent of virtual currency involved in the transaction or transactions.

Sec. 161.014. CUSTOMER SERVICE. A virtual currency kiosk operator that conducts business in this state must:

(1) provide live customer service between the hours of 8 a.m. and 10 p.m. Monday through Friday; and

(2) display on the virtual currency kiosk or screen of the kiosk:

(A) the customer service toll-free telephone number;

(B) the name, address, and telephone number of the operator; and

(C) the days on, time on, and method by which a customer can contact the operator for assistance.

Sec. 161.015. SEIZURE. Any virtual currency kiosk of a virtual currency kiosk operator may be seized if the operator fails to comply with the requirements of this chapter.

Sec. 161.016. RULES. The department may adopt rules necessary to implement, administer, and enforce this chapter.

SECTION 2. This Act takes effect September 1, 2025.