US Virginia Senate allows state banks to offer crypto custody services

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The United States Senate of Virginia unanimously approved a request to amend a bill that would now allow traditional banks operating in the Commonwealth of Virginia to offer virtual currency custody services.

Representative Christopher T. Head introduced a bill (House Act 263) back in January 2022 and demanded an amendment to allow qualifying banks to offer cryptocurrency deposit services:

“A bank can provide virtual currency deposit services to its customers if the bank has 26 relevant protocols in place to effectively manage risk and comply with applicable laws.”
The bill passed the Senate by a vote of 39 to 0 and is expected to be signed into law by Virginia Gov. Glenn Youngkin. Banks intending to offer this service to customers will have to comply with three specific requirements set out in the law – to implement effective risk management systems, to have adequate insurance coverage, and to run a supervisory program to address the risks associated with cryptocurrencies.

However, the Senate will require that bank customers retain direct control over their public and private keys associated with their virtual currency, adding:

“The bank is acting in a trust-building manner and is requiring customers to place their virtual currencies under the control of the bank by generating new private keys that the bank can hold.”
Other states, such as Wyoming, have also recently introduced stablecoin legislation.

Related Topics: US Lawmaker Pushes for Government Regulation of Stacked Coins Listening to Digital Assets

Just last month, the House Financial Services Committee debated whether regulation of stablecoins and digital assets should be considered at the state or federal level.

As a result, North Carolina Representative and Ranking Committee member Patrick McHenry has asked the committee to consider a state-level regulatory framework instead of a comprehensive federal law on stacking coins.

Jean Nili Liang speaks Feb. 8 at a hearing before the House Financial Services Committee.
Citing a report from the President’s Working Group on Financial Markets, Jean Nili Liang, deputy secretary of the Treasury Department at the Treasury Department, said issuers of U.S. dollar-denominated stable currencies—state or federally registered banks—should be subject to the same standards as insured institutions. . .

Source: CoinTelegraph

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