The Senate of the state of Virginia has approved an amendment bill that allows traditional banks to offer crypto custody services. The Senate unanimously agreed to pass the amendment bill to allow crypto custody services within the Commonwealth of Virginia.
The bill had been submitted by Delegate Christopher T. Head in January this year, to provide a conducive environment for banks to offer crypto services.
According to the amendment bill:
“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.”
The bill was voted for by a 39-0 majority and is currently awaiting the governor to sign it into law.
Requirement for a bank to offer crypto custody services
Once the amendment bill is signed into law, traditional banks that want to offer crypto custody services will have to meet three specific requirements to be allowed to offer the services. These requirements are:
- The bank must develop effective risk management processes.
- The bank must have insurance coverage.
- The bank must start a crypto risk oversight plan.
On the other hand, the bank customers are required to keep direct management of their cryptocurrency public and private keys.
The amendment states:
“Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank.”
Crypto laws in other states in the US
Other states already have laws in place to govern how digital currencies are used in the respective states. Wyoming, for example, already has legislation in place for a state-issued stablecoin.
The recent development in states like Wyoming and Virginia comes a few weeks after the House Committee on Financial Services held a lengthy discussion on whether stablecoin and digital assets laws should be handled at the federal or states level. One of the committee members from North Carolina, Patrick McHenry, asked the committee to look at state-level regulatory frameworks instead of a federal provision on stablecoins.
Stablecoins have been a bone of contention in many countries around the world with Japan saying that it shall follow the United States in stablecoin regulations.