USA – TEXAS Trends and Developments Contributed by: Chris Davis, Joshua Smeltzer and Suhani Patel, Gray Reed
does not constitute “notice” of an adverse claim – allowing a purchaser to take free of a prior filed inter- est. The practical takeaway under both frameworks is the same – perfection by control is strongly preferred – but the federal model provides greater doctrinal clar- ity on the priority question. Third, the federal Article 12 introduces the concept of “controllable payment intangibles”, or CPIs – rights to payment embedded in a CER, such as a US- dollar-backed stablecoin where the issuer promises to redeem for dollars. The Texas statute does not address CPIs, a gap that may become increasingly relevant as stablecoins proliferate in Texas commerce. As Texas evaluates alignment with the federal model, extending its UCC framework to encompass CPIs and the broader CER category will likely be essential to maintaining the state’s competitive position. Understanding why these property-right develop- ments matter is essential. For digital assets to func- tion as viable collateral in commercial lending and for businesses to transact in them with confidence, there must be clear rules governing ownership, trans- fer and the priority of competing claims. Article 12 creates a framework where a secured party perfected by control obtains “super-priority” over a conflicting security interest held by a secured party that does not have control and perfected only by filing, even if the filing occurred first. This fundamentally changes how lenders, restructuring attorneys and businesses must analyse secured claims involving digital assets. Texas’s early adoption of virtual currency definitions and control-based perfection under HB 4474 gave the state a head start. That said, ensuring alignment with the broader federal Article 12 framework and incorpo- rating necessary revisions as the financial landscape develops will likely be critical going forward. The Two Biggest Issues As Texas builds out its digital asset regulatory land- scape, two overarching issues demand attention from lawmakers, regulators and practitioners alike. The first is maintaining an overall focus on Texas busi- nesses. Texas is a business-friendly state, and digital asset regulation should reflect that ethos. It means regulatory clarity – clear rules that tell entrepreneurs,
exchanges and token issuers exactly what they need to do to comply. Those rules must also, consistent with Texas tradition, be as minimally intrusive as pos- sible while still offering meaningful consumer protec- tions. Texas must develop a stablecoin framework that is competitive with other states and is compliant with the GENIUS Act. It is well positioned to do this by leveraging its strengths as one of the states with the most chartered banks and credit unions in the country and a deep bench of energy, technology, legal and financial services businesses and talent. The second is the critical role of Texas banks. With the GENIUS Act’s two-tier regulatory structure, the fate of smaller stablecoin issuers (under USD10 bil- lion) will be determined largely by state-level regula- tory frameworks. Texas banks are uniquely positioned to serve as custodians, reserve holders, and partners for stablecoin issuers seeking state-level regulation. The Texas Department of Banking has already author- ised state-chartered banks to provide virtual curren- cy custody services, and the GENIUS Act confirms that regulated financial institutions are authorised to engage in stablecoin-related activities. Credit Union rules, however, do not have the same or similar clarity or guidance. This may not be enough for banks and credit unions to take advantage of this new opportu- nity without fear of running afoul of regulators. Without clear rules, Texas risks losing stablecoin issuers and the deposits and fees that come with them. The Texas State Securities Board (TSSB) has acknowledged that investments related to cryptocurrencies and digital assets are among the top investor threats, underscor- ing the need for vigilant enforcement alongside regula- tory openness. The challenge for Texas will be striking that balance: welcoming digital asset innovation while protecting the integrity of the state’s financial system and the consumers and citizens it serves. Conclusion Texas historically staked its claim as “where the West begins”. Now, it stands at a pivotal moment in conquering another frontier – digital assets. With an operational Strategic Bitcoin Reserve, early-mover status on virtual currency under the UCC, the first banking regulator in the nation to address cryptocur- rency under money transmission law, and a deep pool of financial institutions who have consistently led the
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