S.B. No. 1705 establishes new regulations for virtual currency kiosks in Texas by adding Chapter 161 to the Finance Code. The bill requires kiosk operators to register with the Texas Department of Banking and obtain prior approval before activating their kiosks. Operators must file quarterly reports on their kiosks' locations and operational status, and provide identifying information to law enforcement upon request. The legislation emphasizes consumer protection by mandating that operators disclose the risks associated with virtual currency transactions, ensure customer acknowledgment of these risks, and provide detailed receipts. Additionally, operators are required to use blockchain analytics software to prevent fraud and maintain a written antifraud policy.

The bill further stipulates that operators must designate a full-time compliance officer, implement a daily transaction limit of $3,000, and verify customer identification before transactions. It introduces a 72-hour hold on transactions for first-time customers and requires recipients to have a registered virtual currency wallet. The bill also outlines procedures for revoking registrations and assessing penalties for violations. In cases of suspected fraud, customers can file complaints, and operators must issue refunds if fraud is confirmed. The Finance Commission of Texas is tasked with adopting rules to implement these regulations, which will take effect on September 1, 2025.

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