According to the Legislative Budget Board (LBB), SB 1705 is estimated to have no significant fiscal implication to the State of Texas. The oversight and regulatory responsibilities assigned under the bill would be carried out by the Texas Department of Banking, which operates as a self-directed, semi-independent agency. This means it funds its operations through industry-generated fees rather than general revenue appropriations, and it is explicitly prohibited from causing costs to the state's General Revenue Fund. As a result, the legislation avoids triggering any state budget increases or demands on taxpayer-funded resources.

Additionally, there are no anticipated significant fiscal impacts on local governments. The bill's implementation does not place new financial burdens on municipal or county authorities, as the regulation, reporting, and enforcement mechanisms are centralized at the state level under the Department of Banking. Local governments are not tasked with any direct responsibilities under the bill, thereby shielding them from compliance or administrative costs.

Overall, from a fiscal perspective, SB 1705 is designed to be self-contained and cost-neutral. It leverages existing regulatory structures within an agency that is financially independent from the appropriations process. This approach reflects a fiscally conservative strategy that seeks to regulate an emerging financial technology sector without expanding state expenditures or affecting local budgets.

SB 1705 seeks to regulate the operation of virtual currency kiosks (also known as cryptocurrency ATMs) in Texas. While the bill is a narrowed version of earlier proposals such as HB 2798, it still creates a new regulatory framework that imposes substantial oversight, reporting, and compliance obligations on businesses operating in a nascent and rapidly evolving digital financial market. The stated intent of the bill is to mitigate fraud and protect consumers, particularly vulnerable populations, from scams that utilize these kiosks to exploit individuals. However, the approach taken by the legislation raises significant concerns across several core liberty principles, including individual liberty, free enterprise, and limited government.

At its core, SB 1705 expands the scope of state government. It assigns new regulatory duties to the Texas Department of Banking, grants rulemaking authority to the Finance Commission of Texas, and establishes new investigatory and enforcement powers. While the Department of Banking is self-funded and does not increase the fiscal burden on taxpayers, the bill still grows the administrative state and sets a precedent for deeper involvement in digital asset markets. This move represents a marked departure from the principle of restrained government, particularly in a field that has so far thrived through innovation and decentralized control.

Additionally, the bill permits warrantless access to certain customer transaction data. It allows law enforcement agencies to request virtual currency wallet addresses and transaction hashes without a subpoena or court order. Even though these are limited data points, their forced disclosure without judicial oversight raises due process concerns and undermines the Fourth Amendment’s spirit. This provision is particularly problematic given the private and pseudonymous nature of many cryptocurrency transactions. It sets a concerning precedent for state access to financial data without the standard safeguards of judicial review.

From a free enterprise perspective, SB 1705 imposes a regulatory burden that may deter small businesses and startups from participating in the virtual currency kiosk market. The bill mandates registration, periodic reporting, consumer disclosures, and cooperation with state agencies. While these provisions may seem modest in isolation, together they represent a non-trivial compliance burden, particularly for smaller operators without the legal or administrative infrastructure to manage these new requirements. This could inadvertently favor larger, more established firms and reduce competition and innovation—outcomes at odds with a healthy, dynamic marketplace.

Furthermore, the bill’s consumer protection measures reflect a paternalistic approach that assumes individuals are incapable of making informed decisions—even when adequate warnings are provided. By requiring operators to prominently display risk disclosures and obtain user acknowledgment, the bill appears to affirm personal responsibility. Yet, the enforcement of these procedures through state mandate reduces autonomy and replaces voluntary consumer education with coercive standards. This presumes that individuals are not competent to assess risk and instead require state direction—a position that contradicts the principle of individual liberty.

Lastly, while SB 1705 avoids some of the more intrusive measures found in HB 2798 (such as transaction caps and mandatory refunds), it still reflects the same regulatory philosophy: that centralized state oversight is necessary to manage decentralized financial systems. The bill introduces new norms of surveillance, oversight, and government-defined compliance within an industry premised on user empowerment, privacy, and peer-to-peer trust.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 1705. The bill expands government authority, infringes on individual privacy, burdens free enterprise, and imposes a regulatory structure on a developing industry that may be better served by market-driven solutions and voluntary standards. While combating fraud is an important goal, this legislation does so in a manner that sacrifices core liberty values and risks stifling innovation in the process. Texas Policy Research recommends that lawmakers vote NO on SB 1705.

• Individual Liberty: The bill infringes on individual liberty by authorizing warrantless access to personal financial data. Specifically, the bill allows law enforcement agencies to request and obtain certain identifiers—such as virtual currency wallet addresses and transaction hashes—without a subpoena or court order. This circumvents judicial oversight and erodes due process, undermining privacy protections for Texans engaging in legal financial transactions. Even limited transaction data, when collected systematically, can be used to profile behavior, chilling individual participation in digital financial systems. Furthermore, the state-mandated risk disclosures and user acknowledgments treat consumers as incapable of self-determination, replacing autonomy with coercive oversight.
• Personal Responsibility: The bill promotes personal responsibility by requiring that customers acknowledge risk disclosures before using a virtual currency kiosk. This ensures that individuals are made aware of potential risks—such as price volatility, irreversibility of transactions, and susceptibility to fraud—prior to engaging in digital currency exchanges. However, the use of mandated disclosures and the potential for administrative enforcement diminishes the value of voluntary education and market-based reputational tools. By dictating how responsibility must be structured in each transaction, the bill partially undermines its own goal: empowering individuals to act with informed discretion in the marketplace.
• Free Enterprise: The bill imposes new compliance burdens on businesses that operate virtual currency kiosks in Texas. These include registration with the Department of Banking, quarterly reporting of kiosk locations and wallet addresses, customer disclosure obligations, and cooperation with law enforcement. These requirements may be manageable for large operators but are likely to present a disproportionate barrier for small businesses and startups. By increasing entry costs and the risk of regulatory penalties, the bill could reduce competition and innovation in the emerging digital asset space. In this way, it restricts the natural dynamism of free enterprise by inserting top-down regulatory control into a space traditionally driven by bottom-up innovation.
• Private Property Rights: While the bill does not involve direct takings or seizures of personal or business property, it does place limitations on how individuals can use their money through kiosk platforms. By regulating the terms and conditions under which private currency exchanges occur—and enforcing state-defined transaction protocols—it encroaches on the free use of private property, particularly digital assets. The requirement to report wallet addresses to the state further blurs the line between lawful private property usage and government oversight of private holdings.
• Limited Government: The bill clearly expands the scope and authority of state government. It assigns regulatory and enforcement responsibilities to the Texas Department of Banking and grants the Finance Commission rulemaking authority over virtual currency kiosks. This creates a new regulatory domain, complete with compliance obligations, penalties, and investigative powers. Though the department is self-funded and does not increase direct taxpayer burden, the bill represents a structural increase in bureaucratic oversight and administrative reach. This departs from the principle of limited government and opens the door to future, more invasive regulation of digital finance.