Bill Text: TX SB770 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Relating to the commingling of funds by digital asset service providers.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2023-04-13 - Left pending in committee [SB770 Detail]
Download: Texas-2023-SB770-Introduced.html
| 88R10139 MLH-F | ||
| By: Parker | S.B. No. 770 | |
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| 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. | ||
