The Texas regulator has confirmed that state-registered banks are allowed to serve cryptocurrency firms and hold digital assets if reserves are available.
According to the published document, banks can provide such custodian services, provided that they have developed appropriate policies for effective risk management and compliance with applicable laws. Considering that cryptocurrencies do not exist in physical form, but in the blockchain, the owner of cryptocurrencies has private keys with which he can access them.
The regulator clarified that banks can store cryptocurrencies on behalf of customers by keeping copies of their private keys, while users will be able to have direct control over their cryptoassets. Alternatively, the client can transfer their cryptocurrencies directly to the bank’s management through new private keys that the bank can dispose of on behalf of the client. By analogy with conventional deposits, banks have the opportunity to use several options for safe storage of cryptocurrencies, each of which will differ in terms of security and availability. Therefore, banks need to determine which storage option is best suited for cryptocurrencies, the agency says.
In addition, banks are required to confirm the availability of the necessary reserves with the help of insurance companies in order to protect their clients from financial losses in the event of a fall in the cryptocurrency market. Due to the technical difficulties that may arise when storing cryptocurrencies, banks can cooperate with reliable service providers with experience in working with virtual currencies. In order to avoid risks, banks are encouraged to conduct due diligence of the providers of these services.
The agency issued a notice shortly after the state of Texas passed legislation to create a regulatory framework for investing in digital currencies. Nebraska is also considering a bill according to which local banks can deal with the storage of cryptocurrencies.
