Charted banks in the US state of Texas can now provide crypto custody services to their customers as a notice issued by the Texas Department of Banking allows them to do so.
The notice, issued on Thursday, June 10, confirms that state-chartered banks may store cryptocurrency on clients’ behalf, provided their services are complying with the law. The notice reads:
“This notice affirms that Texas state-chartered banks may provide customers with virtual currency custody services, so long as the bank has adequate protocols in place to effectively manage the risks and comply with applicable law.”
The Texas Department of Banking believes that no new regulations for crypto custody service are required as they are already pursuant to existing laws. The notice reads:
“While custody and safekeeping of virtual currencies will necessarily differ from that associated with more traditional assets, the Texas Department of Banking believes that the authority to provide these services with respect to virtual currencies already exists pursuant to Texas Finance Code § 32.001.”
According to the notice, the type of crypto custody services a bank chooses to offer will depend on the bank’s expertise, risk appetite, and business model. They can either allow customers to retain direct control over their digital asset and merely store copies of the customer’s private keys associated with that asset, or “may cause the customer to transfer their virtual currency directly to the control of the bank, creating new private keys that are then held by the bank on behalf of the customer.”
Furthermore, banks choosing to offer crypto custody services will have to determine which storage option best fits the circumstances. Due to the technical nature of holding digital assets, banks may also partner with third-party services providers with “expertise in handling virtual currency.”
This is another major development for crypto space in the United States. The US Office of the Comptroller of the Currency (OCC) has already allowed federally-charted banks to provide crypto custody services, hold stablecoin reserves, and run a blockchain node, and use stablecoin for payment activities.
Crypto space, especially Bitcoin, is seeing major developments not only in the US but also in other parts of the world. Most recently, El Salvador has passed legislation that approves Bitcoin as a legal tender. According to some sources, India, which was reported earlier to put a blanket ban on cryptocurrencies, may now classify Bitcoin and cryptocurrencies as an asset class.
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