Nebraska bill creating bank framework for digital asset firms signed into law
May 26, 2021, 10:23AM EDT
2 min read
A Nebraska bill that gives companies two paths to compliantly dealing in digital assets has been signed into law.
Governor Pete Ricketts signed the Financial Innovation Act around 5 P.M. last night, according to its sponsor Sen. Michael Flood. The bill passed the state's unicameral chamber last week in a 46–2 vote.
The Financial Innovation Act allows state-chartered banks to create a digital asset division. More importantly, it allows digital asset firms to seek a newly created charter to become a bank that specifically deals in digital assets. Both charters would allow firms to custody digital assets, but the digital asset de novo charter prohibits the firms from taking or lending cash deposits.
These digital asset-focused entities will be permitted to call themselves banks in Nebraska, and they'll be empowered with similar privileges. They can request Fed System access from the Federal Reserve — a privilege that the central bank is currently debating for digital asset businesses. Further, they can obtain federal deposit insurance if available.
But they'll still be somewhat set apart from traditional state banks. Those obtaining the new charters will have to make clear that they only deal in digital assets, and cannot intake cash deposits. They also won't be insured by the Federal Deposit Insurance Corporation (FDIC) since the agency doesn't insure digital assets — and the institutions will be tasked with making that clear to customers.
These entities will be regulated by the state's Department of Banking and Finance, similar to the framework already established in Wyoming. But Flood argues Nebraska's framework goes even further by mandating any fiat held as reserve for digital assets must be held in custody at an FDIC insured entity. Firms like Avanti and Kraken Bank have set up shop in Wyoming, but Flood is hoping the slightly higher standards in Nebraska will afford greater legitimacy, attracting crypto firms to the state.
"We have what I think will be the model legislation for the nation," he said.