A Brief Primer on Texas Digital Asset Policy

As we head into the next Texas state legislative session in 2025, it’s time to reflect on Texas's evolving approach to digital assets, cryptocurrency and decentralized finance (DeFi). Texas has proven itself as both a leader in blockchain innovation and a state committed to regulatory clarity and consumer protection. Texas lawmakers and regulators have taken significant steps to shape the state's cryptocurrency landscape, striking a delicate balance between encouraging technological growth and safeguarding consumers. Below, we highlight a small sample of the notable digital asset bills considered by Texan legislators in recent years.

1. Texas Digital Assets Regulation Act (TDARA)

One of the standout pieces of legislation is the Texas Digital Assets Regulation Act (TDARA). This act provided a comprehensive regulatory framework for cryptocurrency exchanges and wallet providers. Under TDARA, exchanges were required to:

· Obtain State Licenses: Crypto businesses had to apply for a license from the Texas Department of Banking to legally operate within the state.

· Adhere to Security Standards: Platforms needed to comply with strict cybersecurity measures to protect user funds and data. Regular audits were mandated to ensure compliance.

· Enhance Consumer Disclosures: Exchanges were required to disclose their fee structures, terms of service, and potential conflicts of interest, giving users clearer insights into their transactions and risks.

2. Texas Cybersecurity and Digital Asset Protection Act (TC-DAPA)

Cybersecurity will be an enduring priority for organizations around the globe. The Texas Cybersecurity and Digital Asset Protection Act (TC-DAPA) aimed to strengthen the security of digital assets in the state:

· Enhanced Security Protocols: The act required crypto businesses to adopt multi-signature authentication and advanced encryption to safeguard customer data and assets.

· Compliance Audits: Regular third-party cybersecurity audits were mandated to verify that platforms met the required standards.

· Incident Reporting: TC-DAPA established a requirement for platforms to report significant cybersecurity breaches to the Texas Department of Banking within 24 hours, ensuring prompt response and mitigation.

3. Blockchain Transparency for Public Records, Recordkeeping, and Communications

Back in 2019, Texas lawmakers authorized a law clarifying that businesses registered in the state can use blockchain for various corporate services. The use of blockchain in public government services has also been explored, primarily through bills such as the Blockchain Transparency in Public Records Act. This legislation focused on using blockchain for improving government transparency and reducing fraud:

· Property Registration Pilots: Certain counties in Texas were authorized to pilot blockchain-based property registries, which streamlined real estate transactions and provided tamper-proof records.

· Enhanced Record-Keeping: The act supported the use of blockchain for issuing and verifying public documents, improving efficiency and reducing the potential for document forgery.

Texas's crypto policy demonstrates its commitment to fostering a secure and innovative environment. Legislation such as TDARA, the Consumer Protection in Digital Assets Act, TC-DAPA, and the DFDA provided comprehensive frameworks for both centralized exchanges and DeFi projects. These measures reflect Texas’s careful approach to nurturing crypto growth while protecting consumers and maintaining regulatory integrity. As we look to the future, Texas will need to adapt its policies to continue balancing innovation with regulation in an ever-changing digital landscape.