S.B. No. 1705 introduces comprehensive 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, provide identifying information to law enforcement upon request, and inform customers about the risks associated with virtual currency transactions. Additionally, operators are mandated to implement a written antifraud policy, designate a qualified compliance officer, and adhere to a daily transaction limit of $3,000, ensuring customer identification through valid ID.

The bill also establishes a 72-hour hold on transactions for first-time customers, outlines permissible transaction fees, and sets procedures for revoking registrations and issuing cease and desist orders for violations. It allows the commissioner to seize records and assets under emergency orders, which must specify grounds and compliance requirements. Customers who suspect fraudulent activity can file complaints, and operators must issue refunds if fraud is confirmed. The Finance Commission of Texas is tasked with adopting necessary rules for implementation, with the regulations set to take effect on September 1, 2025.

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