Digital currencies have skyrocketed during the pandemic, and Texas doesn’t want to be left out of a future industry boom.
The Texas Department of Banking sent a notice to the industry on Thursday advising state chartered banks that they have the authority to provide custody or safekeeping of virtual currencies. At the end of February, there were 216 Texas state chartered banks regulated by the Department of Banking.
“Texas sees the rise of the virtual currency industry and is trying to get ahead of the curve and ensure that our regulated banks are ready to stay competitive,” said Marcus Adams, deputy general counsel for the department. state banking.
It is not a new law, but rather the state that determines that the existing law allows it.
If a customer holds their own Bitcoin or other virtual currency, it means they have private keys in a wallet to access their currency. But in Texas, they can turn that responsibility over to a third-party bank. The bank can either store a copy of the key as it does for important documents, or the customer can fully transfer the digital currency to the bank.
Just because banks can take on this new role doesn’t mean they all will. Adams said banks need to assess whether they have the appropriate risk management to do so.
The clarification of the interpretation of Texas law comes shortly after Texas Governor Greg Abbott enacted the “Virtual Currency Bill,” recognizing the legal status of virtual currencies. Texas became the second state after Wyoming to recognize blockchain and cryptocurrency in its Uniform Commercial Code, which governs commercial transactions.
“Blockchain is a booming industry that Texas needs to be involved in. I just signed a law for Texas to create a master plan for the expansion of the blockchain industry in Texas,” Abbott tweeted released last week.
The bill provides a definition of “cryptocurrency” in the commercial code and provides basic legal rules for crypto companies. It specifically sets out the rights of virtual currency holders, including the right to control the currency even if its management is shared with another party. This was a necessary step before the state’s banking department could announce that virtual currency holders can use a bank for safekeeping.
The virtual currency bill is similar to the “digital asset bill” passed in Wyoming in 2019, which has helped position it as a hub for bitcoin investors. Wyoming has been proactive in providing laws to help virtual currency companies operate in the state.
When the Texas bill was first introduced in mid-March, Abbott was quick to show his support on Twitter in a March 29 message. Tweeter:
“Count me among the supporters of the proposed crypto law. It is increasingly used for transactions and is starting to become widespread as an investment. … Texas should run this like we did with a gold deposit.
The value of the cryptocurrency market exceeded $ 2 trillion for the first time in April.