According to the Legislative Budget Board (LBB), HB 2798 is not expected to have a significant fiscal impact on the state. The primary regulatory responsibilities for implementing the bill’s provisions would fall under the Texas Department of Banking, which operates as a self-directed, semi-independent agency. This status means that the agency is responsible for covering its own operational costs and is explicitly prohibited from imposing any financial burden on the state’s General Revenue Fund. Additionally, the agency does not participate in the traditional legislative appropriations process.

Furthermore, the bill authorizes the imposition of a fee related to virtual currency kiosk transactions. However, the fiscal note does not project any substantial revenue gain or administrative cost associated with this fee, suggesting that any funds generated would likely be used internally by the Department of Banking to offset minor administrative expenses resulting from oversight or enforcement.

At the local level, the bill is also expected to have minimal financial impact. No significant costs or revenues are anticipated for local governmental units. This aligns with the bill’s focus on consumer protection and transaction transparency rather than infrastructure expansion or direct government service provision.

HB 2798 seeks to establish a new regulatory framework for virtual currency kiosks in Texas, aiming to enhance consumer protection and reduce fraud by requiring clear risk disclosures, transaction transparency, and refund options for certain victims of scams. While the bill is well-intentioned, particularly in response to increasing reports of fraud targeting vulnerable populations, it significantly expands the scope of state government into a rapidly evolving, decentralized financial sector.

The bill grants new enforcement and rulemaking authority to the Texas Department of Banking and the Finance Commission of Texas, creating ongoing oversight, investigative powers, and the ability to impose fees. These provisions mark a clear expansion of regulatory reach and administrative structure, which raises concerns for those committed to limited government and restrained bureaucratic growth. Furthermore, the mandates on kiosk operators—including customer consent, transaction caps for new users, detailed disclosures, and refund obligations—introduce compliance costs and legal risks that could deter innovation and disadvantage small businesses and startups.

Critically, the bill infringes on free enterprise and personal financial autonomy by restricting how and when individuals can use their own money, even when fully informed. Its paternalistic approach assumes the need for government intervention in every digital asset transaction, rather than empowering individuals with information and letting the market drive improvements in security and service. While consumer education and voluntary standards are worthy goals, HB 2798 overreaches in its execution and sets a precedent for excessive regulation in emerging industries.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on HB 2798. The bill’s approach to protecting consumers imposes more costs than benefits, especially in terms of liberty, market freedom, and restrained governance.

• Individual Liberty: The bill restricts individual liberty by imposing government-mandated warnings, transaction limits, and refund policies on voluntary cryptocurrency transactions. While meant to protect consumers, especially new or vulnerable users, these measures also inhibit personal financial autonomy, treating individuals as incapable of making informed choices, even when risks are disclosed. The $2,000 transaction cap for new users, in particular, limits freedom in a paternalistic way.
• Personal Responsibility: The bill encourages personal responsibility through its emphasis on risk disclosures and requiring customers to acknowledge them before transactions. This fosters informed decision-making. However, the mandatory refund policy for fraud victims, while compassionate, may undermine the idea that individuals must bear the consequences of their choices in a free market, especially when proper warnings are already in place.
• Free Enterprise: The bill creates a significant regulatory burden on virtual currency kiosk operators, including small businesses and startups. It mandates extensive disclosures, imposes transaction limits, and authorizes state investigations and fees. These requirements could discourage market participation, increase compliance costs, and stifle innovation in the digital asset industry. Entrepreneurs in emerging technologies may view this as a signal that Texas is moving toward heavy-handed regulation.
• Private Property Rights: The bill does not directly limit or seize private property, nor does it change ownership rights to digital or fiat currency. However, it does place conditions on how individuals can use their property (i.e., their money) via kiosk systems, especially during the first 72 hours of engagement. This creates a gray area where regulation begins to restrict the exercise of property rights without outright violating them.
• Limited Government: The bill expands the role of state government by creating new oversight responsibilities for the Texas Department of Banking and empowering it to collect fees and conduct investigations. It also enables the Finance Commission to write new rules. These provisions represent a clear departure from limited government and set a precedent for further regulatory expansion into financial technologies and digital assets.