A Texas state regulator, the Texas Department of Banking (which charters state banks and supervises financial services), has issued a notice recently stating that the local banks now have the permission of providing cryptocurrency services in the state of Texas.
The concerned note says that the Texas 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.”
In the note, the Texas Department of Banking has briefly explained about cryptocurrencies and went on to say that banks can store cryptocurrencies on behalf of its customers. The banks can do it by either keeping copies of the private keys of the customers or holding the assets in the bank’s custody (through the creation of new private keys that are held by the bank).
The concerned state regulatory authority also wrote in the note that:
“As with the method of custody services, several secure storage options are available to the bank, each of which has distinctive characteristics pertaining to level of security and accessibility. The bank will have to determine which storage option best fits the circumstances.”
For protecting the cryptocurrency holdings, the Texas state regulator has asked the state banks to confirm the existence of adequate coverage with its insurance carrier. The regulatory note was published soon after members of the Texas House of Representatives passed a bill last month recognizing cryptos under commercial law.
Other US states where the state-chartered banks are actively embracing cryptocurrency custody services include Nebraska and Wyoming. In September 2020, Wyoming chartered Kraken crypto exchange as its first cryptocurrency bank. In July 2020, authorization was given to federally chartered banks to provide cryptocurrency custody services.
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