HB 1666 (88R) — digital asset service providers, Fin. Code ch. 160, enrolled
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H.B.ANo.A1666
1 AN ACT
2 relating to the commingling of funds by digital asset service
3 providers; providing an administrative penalty.
4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
5 SECTIONA1.AASubtitle E, Title 3, Finance Code, is amended by
6 adding Chapter 160 to read as follows:
7 CHAPTER 160. DIGITAL ASSET SERVICE PROVIDERS
8 Sec.A160.001.AADEFINITIONS. In this chapter:
9 (1)AA"Commission" means the Finance Commission of
10 Texas.
11 (2)AA"Customer funds" means the digital assets, fiat
12 currency, or other property deposited by a digital asset customer.
13 (3)AA"Department" means the Texas Department of
14 Banking.
15 (4)AA"Digital asset" means a natively electronic asset
16 that confers economic, proprietary, or access rights and is
17 recorded or stored in a blockchain, cryptographically secured
18 distributed ledger, or similar technology, and includes:
19 (A)AAa digital asset that the laws of any country
20 consider to be legal tender; or
21 (B)AAvirtual currency as defined by Section
22 12.001, Business & Commerce Code.
23 (5)AA"Digital asset customer" means a person who
24 deposits fiat currency or a digital asset with a digital asset
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H.B.ANo.A1666
1 service provider.
2 (6)AA"Digital asset service provider" means an
3 electronic platform that facilitates the trading of digital assets
4 on behalf of a digital asset customer and maintains custody of the
5 customer ’s digital assets.
6 Sec.A160.002.AAADMINISTRATION. The department shall
7 administer this chapter.
8 Sec.A160.003.AAAPPLICABILITY. (a) This chapter applies to a
9 digital asset service provider doing business in this state that:
10 (1)AAholds a money transmission license under
11 Subchapter D, Chapter 151; and
12 (2)AAeither:
13 (A)AAserves more than 500 digital asset customers
14 in this state; or
15 (B)AAhas at least $10 million in customer funds.
16 (b)AAThis chapter does not apply to:
17 (1)AAa bank, as defined by Section 31.002; or
18 (2)AAan entity excluded by commission rule or by order
19 of the banking commissioner based on a finding that the entity is:
20 (A)AAnot required to hold a money transmission
21 license under Subchapter D, Chapter 151; or
22 (B)AAnot subject to the requirements of this
23 chapter.
24 Sec.A160.004.AADUTIES OF DIGITAL ASSET SERVICE PROVIDERS.
25 (a) Except as provided by this chapter, a digital asset service
26 provider may not:
27 (1)AAcommingle customer funds with funds belonging to
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H.B.ANo.A1666
1 the digital asset service provider, including the digital asset
2 service provider ’s:
3 (A)AAoperating capital;
4 (B)AAproprietary accounts;
5 (C)AAdigital assets;
6 (D)AAfiat currency; or
7 (E)AAother property that is not customer funds;
8 (2)AAuse customer funds to secure or guarantee a
9 transaction other than a transaction for the customer contributing
10 the funds; or
11 (3)AAmaintain customer funds in such a manner that a
12 digital asset customer may be unable to fully withdraw the
13 customer ’s funds.
14 (b)AAIn addition to any other requirements under state law, a
15 digital asset service provider shall maintain customer funds not
16 subject to the requirements of Chapter 151:
17 (1)AAin separate accounts for obligations to each
18 digital asset customer; or
19 (2)AAin an omnibus account that only contains digital
20 assets of digital asset customers and in which digital assets of
21 digital asset customers are not strictly segregated from each
22 other.
23 (c)AAA digital asset service provider shall create a plan to
24 allow:
25 (1)AAeach digital asset customer to view at least
26 quarterly an accounting of:
27 (A)AAany outstanding liabilities owed to the
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1 digital asset customer; and
2 (B)AAthe digital asset customer ’s digital assets
3 held in custody by the digital asset service provider; and
4 (2)AAan auditor to access and view at any time a
5 pseudonymized version of the information made available to each
6 digital asset customer under Subdivision (1).
7 (d)AANot later than the 90th day after the end of each fiscal
8 year, a digital asset service provider shall file a report with the
9 department. The report must include the following information, as
10 of the end of the digital asset service provider ’s fiscal year:
11 (1)AAan attestation by the digital asset service
12 provider of outstanding liability to digital asset customers;
13 (2)AAevidence of customer assets held by the provider;
14 (3)AAa copy of the provider ’s plan under Subsection (c);
15 and
16 (4)AAan attestation by an auditor that the information
17 in the report is true and accurate.
18 (e)AAAn auditor fulfilling the requirements of this section
19 must:
20 (1)AAbe an independent certified public accountant
21 licensed in the United States; and
22 (2)AAapply attestation standards adopted by the
23 American Institute of Certified Public Accountants.
24 (f)AAA digital asset service provider may meet the
25 requirements of Subsections (c)(2), (d)(1), (d)(2), and (d)(4) by
26 filing with the department a copy of:
27 (1)AAan audit of the digital asset service provider
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H.B.ANo.A1666
1 performed in accordance with the Sarbanes-Oxley Act of 2002 (15
2 U.S.C. Section 7201 et seq.) or regulations adopted under that Act;
3 or
4 (2)AAan audit of the digital asset service provider ’s
5 parent company that includes an audit of the digital service
6 provider performed in accordance with the Sarbanes-Oxley Act of
7 2002 (15 U.S.C. Section 7201 et seq.) or regulations adopted under
8 that Act.
9 (g)AAA digital asset service provider may include an amount
10 of funds, assets, or property belonging to the digital asset
11 service provider with customer funds for the purpose of
12 facilitating trade and operational needs to provide digital asset
13 services. That amount of funds, assets, or other property
14 belonging to the digital asset service provider is considered and
15 shall be treated as customer funds. A digital asset service
16 provider may only withdraw or assert a claim on that amount to the
17 extent that amount exceeds the amount deposited with the digital
18 asset service provider by or for digital asset customers.
19 (h)AAThe commissioner may waive a requirement of this section
20 or allow a digital asset service provider to submit alternative
21 information to satisfy a requirement of this section if the
22 commissioner determines that the waiver or alternative information
23 is consistent with the purposes of this chapter and in the best
24 interest of the public.
25 Sec.A160.005.AAREQUIREMENTS FOR MONEY TRANSMISSION LICENSE.
26 (a) In addition to any other requirements under Subchapter D,
27 Chapter 151, a digital asset service provider must comply with the
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H.B.ANo.A1666
1 requirements of this chapter to obtain and maintain any money
2 transmission license under Subchapter D, Chapter 151. A digital
3 asset service provider applying for a new money transmission
4 license under Subchapter D, Chapter 151, must submit to the
5 department the report required by Section 160.004(d).
6 (b)AAThe department may suspend and revoke a money
7 transmission license issued under Subchapter D, Chapter 151, to a
8 digital asset service provider if the provider violates the
9 requirements of this chapter.
10 (c)AAThe department may impose any penalty under Subchapter
11 H, Chapter 151, that the department may impose on a person who
12 violates that chapter on a digital asset service provider who
13 violates this chapter.
14 (d)AAThe commissioner may examine a digital asset service
15 provider in the same manner as allowed under Subchapter G, Chapter
16 151. Information disclosed to the commissioner in connection with
17 an examination under this section is confidential information and
18 subject to the provisions regarding confidentiality under
19 Subchapter G, Chapter 151.
20 Sec.A160.006.AARULES. The commission may adopt rules to
21 administer and enforce this chapter, including rules necessary and
22 appropriate to implement and clarify this chapter.
23 SECTIONA2.AAThis Act takes effect September 1, 2023.
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H.B.ANo.A1666
______________________________ ______________________________
AAAAPresident of the Senate Speaker of the HouseAAAAAA
I certify that H.B. No. 1666 was passed by the House on April
20, 2023, by the following vote:AAYeas 148, Nays 0, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 1666 on May 17, 2023, by the following vote:AAYeas 145, Nays 0,
1 present, not voting.
______________________________
Chief Clerk of the HouseAAA
I certify that H.B. No. 1666 was passed by the Senate, with
amendments, on May 15, 2023, by the following vote:AAYeas 31, Nays
0.
______________________________
Secretary of the SenateAAA
APPROVED: __________________
AAAAAAAAAAAAAAAAADateAAAAAAA
AAAAAAAAA __________________
AAAAAAAAAAAAAAAGovernorAAAAAAA
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