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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB3833

Regular Session

Relating to the regulation of money services businesses.

Government Affairs & Regulatory Compliance Analysis

HB3833: Government Affairs Overview

HB3833 is effective immediately (June 20, 2025), fundamentally altering the vetting process for Texas Money Services Business (MSB) leadership and modernizing investment reserve standards. The law replaces "principals" with "Key Individuals," mandating credit reports and deeper background checks for all control persons, while simultaneously requiring Currency Exchange licensees to adopt GAAP accounting standards. Failure to align executive vetting with these new standards grants the Banking Commissioner broad authority to revoke corporate licenses.

Rep. Stan Lambert·House Bill·Regular Session

Critical
Medium Cost
Effective:2025-06-20
Enforcing Agencies

Texas Department of Banking

Business Impact

Who HB3833 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

🏦

Banking & Finance

Affected business types:

  • Banks
  • Credit unions
  • Financial services firms
  • Insurance companies
View all banking & finance legislation
🏭

Manufacturing & Business

Affected business types:

  • Manufacturers
  • Industrial facilities
  • Supply chain companies
  • Logistics providers
View all manufacturing & business legislation

Key Operational Considerations

  • 1Custodial Agreements: If holding stablecoins as permissible investments, review contracts with third-party custodians. You must ensure they meet the forthcoming Commissioner-approved qualifications.

Estimated Cost Impact

mediumModerate costs expected for implementation.

Enforcing Agencies

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HB3833
Relating to the regulation of money services businesses.
Critical Urgency
Passed with Opposition
House Vote130 - 2
YEA
98% in favor132 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
2
Total Opposition Votes
Cost Impact
Medium
Effective
2025-06-20
Enforcing Agencies
Texas Department of Banking
Primary Author: Rep. Stan Lambert
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Immediate effect due to supermajority vote).
  • Compliance Deadline:
  • Vetting: Immediate. Any "Key Individual" designated or hired from today forward must meet the new background check standards.
  • Financial Reporting: The first annual report due after June 20, 2025, must adhere to GAAP standards (due 90 days post-fiscal year).
  • Agency Rulemaking: The Texas Department of Banking (DOB) must prescribe qualifications for "third-party custodians" holding stablecoin reserves. Until these rules are published, a regulatory gray zone exists regarding which custodians are compliant.

Immediate Action Plan

  • 1. HR Audit: Immediately order credit reports and litigation checks for all current leadership to identify potential red flags before the next DOB exam.
  • 2. Accounting Conversion: Currency Exchange licensees must contact external accountants today to initiate the migration to GAAP financial statements.
  • 3. Custody Review: If holding stablecoins, verify your custodian is a chartered trust company or bank; avoid unregulated offshore custodians until rulemaking is finalized.
  • 4. Insurance Review: Check Directors & Officers (D&O) policies for coverage regarding regulatory investigations triggered by executive background issues.

Operational Changes Required

Contracts

  • Employment Agreements: Amend executive contracts to require immediate disclosure of any civil litigation involving fraud, fiduciary breach, or mismanagement. This protects the company’s license if a "Key Individual" becomes a liability.
  • Custodial Agreements: If holding stablecoins as permissible investments, review contracts with third-party custodians. You must ensure they meet the forthcoming Commissioner-approved qualifications.
  • M&A Purchase Agreements: For acquisitions of existing licensees, draft agreements to include an attestation that the buyer will not make "material changes" to the business plan. This triggers a streamlined regulatory approval process (Section 152.152).

Hiring/Training

  • Background Check Protocols: Update HR workflows immediately. Standard criminal background checks are no longer sufficient. You must now procure independent credit reports and litigation history for all "Key Individuals" (formerly principals).
  • Role Definitions: Re-evaluate organizational charts. The shift from "Principal" to "Key Individual" may expand the scope of vetted employees to include regional compliance officers or managers with significant control over funds.

Reporting & Record-Keeping

  • Currency Exchange Accounting: Licensees must transition from tax-basis or cash-basis accounting to United States Generally Accepted Accounting Principles (GAAP).
  • Key Individual Dossiers: Maintain a specific compliance file for every Key Individual containing their fingerprints, credit report, and litigation history attestation for DOB examination.
  • Stablecoin Reserves: If using stablecoins for permissible investments, document proof of "direct" custody or a valid contract with a qualified third-party custodian.

Fees & Costs

  • Audit Fees: Currency Exchange licensees not currently using GAAP will face significant one-time and recurring costs to convert financial systems and engage external auditors.
  • Vetting Costs: Incremental increase in recruitment costs due to mandated credit reporting and deeper investigatory requirements.

Strategic Ambiguities & Considerations

  • "Key Individual" Scope: The statute does not explicitly define the lower bounds of a "Key Individual." Until the DOB issues clarification, the agency may interpret this broadly to include non-executive staff with access to critical systems.
  • Custodian Qualifications: The law permits third-party custody of stablecoins but relies on future rulemaking to define *who* qualifies as a custodian. Using a non-bank crypto custodian presents a compliance risk until the DOB publishes the specific criteria.

Need Compliance Guidance on This Legislation?

JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 5, 2025
Passed House
May 16, 2025
Passed Senate
May 25, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsBusiness & CommerceBusiness & Commerce--generalFinancialFinancial--banksFinancial--generalCurrency & Currency ExchangeBanking Commissioner of TexasOccupational RegulationOccupational Regulation--other Trades & Professions
03

House Authors

Rep. Stan LambertRepublican · Primary Author
Coauthors (1)

Senate Sponsor

Sen. Nathan JohnsonDemocrat · Primary Sponsor

Bill Text(with markup)

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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Quick Reference

Frequently Asked Questions

Common questions about HB3833

Q

What does Texas HB3833 do?

HB3833 is effective immediately (June 20, 2025), fundamentally altering the vetting process for Texas Money Services Business (MSB) leadership and modernizing investment reserve standards. The law replaces "principals" with "Key Individuals," mandating credit reports and deeper background checks for all control persons, while simultaneously requiring Currency Exchange licensees to adopt GAAP accounting standards. Failure to align executive vetting with these new standards grants the Banking Commissioner broad authority to revoke corporate licenses.

Q

Who authored HB3833?

HB3833 was authored by Texas Representative Stan Lambert during the Regular Session.

Q

When was HB3833 signed into law?

HB3833 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB3833?

HB3833 is enforced by Texas Department of Banking.

Q

How significant are the changes in HB3833?

The regulatory priority for HB3833 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB3833?

The cost impact of HB3833 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does HB3833 address?

HB3833 addresses topics including business & commerce, business & commerce--general, financial, financial--banks and financial--general.

Q

What are the key dates for HB3833?

Key dates for HB3833: Effective date is 2025-06-20. Rulemaking: Prescribe qualifications for third-party custodians holding stablecoin reserves (Section 9 / Sec 152.356(a-1)). (No statutory deadline specified). Consult with legal counsel regarding applicability.

Q

What are the penalties under HB3833?

HB3833 establishes the following penalties: administrative penalty of License Revocation/Suspension for Failure of a 'key individual' (formerly principal) to meet background/fitness requirements or comply with orders.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by HB3833?

HB3833 primarily affects Texas businesses and commercial enterprises, banks, credit unions, and financial services firms. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026