Texas greenlights state-chartered banks to custody crypto
June 10, 2021, 3:29PM EDT
1 min read
In a June 10 notice, the Texas Department of Banking gave state-chartered banks the go-ahead to custody crypto assets.
The notice is a simple affirmation that standard risk-based assessments by the banks themselves are adequate to provide cryptocurrency custody.
The Department of Banking wrote:
"What virtual currency custody services a bank chooses to offer will depend on the bank’s expertise, risk appetite, and business model. For instance, the bank may choose to allow the customer to retain direct control over their own virtual currency and merely store copies of the customer’s private keys associated with that virtual currency. Alternatively, the bank may cause the customer to transfer their virtual currency directly to the control of the bank, creating new private keys that are then held by the bank on behalf of the customer."
If the news sounds familiar, the U.S.' national banking regulator made a similar announcement last year, greenlighting crypto custody as an interpretation of existing law. A subsequent change in federal administration has, however, cast doubt on the future of that interpretation.
Texas has, meanwhile, been growing especially favorable to the crypto industry. Governor Greg Abbott recently took to Twitter to promote a new law to promote the state's engagement with blockchain.
Bitcoin miners have been rushing in to take advantage of the regulatory environment as well as abundant supplies of wind energy in West Texas.
Today the always-on demands of online markets have to be matched with the ability to access opportunities instantly and with no limits. Historically correspondent banks would move large sums of money for those needing to transfer funds while creating bottlenecks of unnecessary friction.
Ethereum had a breakout year in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the first time. Its network facilitated upwards of $7 trillion value transfer. Non-fungible tokens (NFTs) emerged as another “killer application” that have put its technology on the global stage and caught the attention of the masses.