Crypto Kiosk Bill Gives Police Wallet Data Without A Subpoena

The text as introduced · 1,993 words

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.