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SB 2522

Banks and Financial Institutions - As introduced, prohibits a bank from digitizing or otherwise converting money held by the bank on behalf of a consumer into a digital currency, digital medium of exchange, or digital monetary unit of account, including cryptocurrency, without express, written authorization from the consumer for whom the money is held. - Amends TCA Title 45.

114th Regular Session (2025-2026) Introduced by Jeff Yarbro

Prohibits banks from digitizing consumer funds into digital currencies without express written consent, with enforcement, penalties, and private rights of action starting July 1, 2

Assigned to General Subcommittee of Senate Commerce and Labor Committee
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Bill Summary · SB 2522

Summary of SB 2522 (Session 114) – Tennessee

Bill at a Glance

  • Subject: Banks and Financial Institutions – prohibition on digitizing customer funds into digital currencies without authorization
  • Purpose: Prohibit banks (state banks, savings and loan associations, and credit unions) from converting or digitizing money held for a consumer into digital currencies or related digital monetary forms (including cryptocurrency) without the consumer’s express written consent.
  • Status & Timeline: Introduced in 2026; assigned to Senate Commerce and Labor Committee. Takes effect July 1, 2026 and applies to conduct on or after that date.

What the bill would do (Key Provisions)

  1. New statutory prohibition

    • Banks may not digitize or convert money held on behalf of a consumer into:
      • a digital currency
      • a digital medium of exchange
      • a digital monetary unit of account
      • including cryptocurrency
    • Such actions require express, written authorization from the consumer.

  2. Enforcement and penalties (via Commissioner of Financial Institutions)

    • If the commissioner determines a bank violated the prohibition after notice and a hearing, the commissioner may order:
      • Cease and desist the violation
      • Pay a civil penalty (up to $1,000 per violation; up to $1,000 for each day the violation continues in the case of a continuing violation)
      • Pay costs and expenses of the investigation and prosecution (including reasonable attorney fees)

  3. Private rights of action

    • An individual or entity aggrieved by a violation may file a civil lawsuit against the bank.
    • If a court finds a violation, it may:
      • Issue an injunction
      • Award actual damages
      • Award punitive damages
      • Award reasonable court costs and attorney fees

  4. Definition and scope

    • Defines “Bank” to include state banks, savings and loan associations, and credit unions.
    • Defines “Commissioner” as the commissioner of the Tennessee Department of Financial Institutions.

  5. Effective date and applicability

    • The act takes effect on July 1, 2026.
    • Applies to conduct occurring on or after that date.

Who is Affected

  • Banks and credit unions in Tennessee (state banks, savings and loan associations, and credit unions) would be restricted from converting consumer funds into digital currencies without consent.
  • Consumers and other aggrieved parties would gain a new private right of action to seek damages, injunctions, and related costs if a bank violates the prohibition.
  • The Tennessee Department of Financial Institutions (DFI) would enforce compliance, with authority to impose penalties and costs and to require cease-and-desist orders.

Potential Impact

  • Consumer protection impact: Strengthens safeguards against banks digitizing customer funds into cryptocurrencies or other digital monetary forms without explicit written consent.
  • Regulatory impact: Creates explicit enforcement mechanisms for the DFI and broadens private litigation avenues for enforcement.
  • Economic/operational impact on banks: Banks must obtain explicit written authorization from customers before any conversion to digital currencies and may face penalties or litigation if they fail to do so. The fiscal note estimates a non-significant overall fiscal impact, with penalties capped at $1,000 per violation or per day for ongoing violations.
  • Judicial impact: Courts would handle injunctive relief, damages (actual and punitive), and associated costs in civil actions arising from violations.

Fiscal and Administrative Considerations

  • Penalties: Civil penalties capped at $1,000 per violation or per day of continuing violation.
  • Costs: Banks may be responsible for investigation/prosecution costs and private plaintiffs for court costs and attorney fees.
  • Resource use: DFI would enforce penalties within existing resources; courts can manage any increased caseload within current resources.
  • Economic impact on commerce: Claimed to be not significant.

If you’d like, I can provide a side-by-side comparison with current Tennessee law or draft a one-page briefing for a legislative committee.

Compiled from official sources — confirm details with the bill’s official record.

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