U.S ‘Virginia’ Allows Banks To Offer Cryptocurrency Custody Services

The U.S. Senate of Virginia has approved an amendment in a bill allowing banks in the Commonwealth of Virginia to provide custody services for crypto assets.

In January 2022, senatorial candidate Christopher T. Head proposed an amendment to House Bill 263 to allow banks to offer custody services for cryptocurrencies which are now approved:

The news amendments say:

“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.”

This means that banking organizations that intend to offer virtual currency custody services will have to adhere to the three specific requirements mentioned in the bill, implement effective risk management systems, have adequate insurance coverage, and run an oversight program to address the associated risks of cryptocurrencies.

“If the bank decides to move forward with offering such services, the bank shall:

1. Implement effective risk management systems and controls to measure, monitor, and control relevant risks associated with custody of digital assets such as virtual currency;
2. Confirm that it has adequate insurance coverage for such services;
3.  Maintain a service provider oversight program to address risks to service provider relationships as a result of engaging in virtual currency custody services.”

Additionally, the bill transfers direct control of private keys associated with the storage of cryptocurrencies to bank clients:

“In providing such services in a nonfiduciary capacity, the bank shall act as a bailee, taking possession of the customer’s asset for safekeeping while the legal title remains with the customer, meaning that the customer retains direct control over the keys associated with their virtual currency.”

The amendments were passed unanimously by the Virginia State Senate, and the bill was submitted for signature by Virginia Gov. Glenn Youngkin. In addition, Wyoming state legislators are also interested in creating a favorable environment for developing the crypto industry in their jurisdiction.

In late February 2022, a bill was submitted to the Wyoming State Legislature to allow the state treasury to issue stable coins pegged to the US dollar. Earlier, another legislative initiative was taken to help attract miners and cryptocurrency companies to the state.