The Texas Banking Department announced that state chartered banks can provide cryptocurrency custody services. “The Texas Banking Department believes that the power to provide these virtual currency-related services already exists,” the Banking Authority said.
The Chartered Bank of Texas is officially authorized to provide crypto custody services
The Texas Department of Banking issued a notice to the banking industry on Thursday, stating:
The Texas Chartered Bank can provide customers with virtual currency custody services, as long as the bank has established sufficient agreements to effectively manage risks and comply with applicable laws.
“Although the custody and custody of virtual currency is necessarily related to more traditional assets, the Texas Banking Department believes that the power to provide these virtual currency-related services under Section 32.001 of the Texas Financial Code already exists,” Notice for clarification.
Banking authorities explained that each bank will choose which crypto custody services to provide based on its expertise, risk appetite and business model.
For example, a bank may allow customers to retain direct control over their own cryptocurrency and only store a copy of the private key associated with the coin. Alternatively, the bank can control the customer’s cryptocurrency and create a new private key held on behalf of the customer.
The Texas Banking Regulatory Agency has previously determined that Texas chartered banks can provide custody services in a trusted or untrusted capacity. If the bank provides custodial services as a trustee, it will have the right to manage the customer’s cryptocurrency, just like any other type of assets held in such an identity.
The regulator went on to say that before banks provide cryptocurrency services, management must “conduct due diligence and carefully examine the risks involved in providing new products or services through an orderly risk assessment process”. If the management and the board of directors decide to promote encryption services, “effective risk management systems and control measures must be implemented to measure, monitor and control the risks associated with digital asset custody.”
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