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US Senate allows Virginia banks to offer crypto custody services

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The US Senate unanimously enacted a bill that allows normal banks in Virginia to offer virtual currency custody services.

In fact, in January 2022, Delegate Christopher T. Head (House Measure No. 263) introduced a measure (House Bill No. 263) to allow qualifying institutions to offer crypto custody services:

“If a bank has 26 proper risk management procedures in place and conforms with applicable legislation, it may offer virtual currency custody services to its customers.”

Additionally, the bill was passed with an overwhelming 39-0 majority in the Virginia Senate. And is now awaiting Governor Glenn Youngkin‘s signature. Moreover, banks that want to offer this service to their customers must meet three specific requirements laid out in the bill. Thus, they must build proper risk management systems, have adequate insurance coverage, and begin a cryptocurrency risk oversight programme.

The Senate, on the other hand, will insist that bank customers maintain direct control over their virtual currency’s public and private keys, adding:

“As a fiduciary, the bank must force consumers to transfer their virtual currency to the bank’s management. By creating new private keys that the bank will maintain.”

Legislation for a state-issued stablecoin recently introduced in other states, including Wyoming.

Last month, the House Financial Services Committee questioned whether stablecoin and digital asset regulations should be handled at the state or federal level.

In this regard, ranking committee member Patrick McHenry of North Carolina urged that the committee looks into state-level regulatory frameworks. Rather than a comprehensive federal statute on stablecoins.

Jean Nellie Liang speaking at Feb. 8 House Committee on Financial Services hearing

According to the President’s Working Group on Financial Markets, US dollar-pegged stablecoin issuers. Including state and federally licenced banks, should be subject to the same regulations as insured depository institutions.

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