According to a notice issued by the Texas Department of Banking, Texas approves state-chartered banks to hold bitcoin, with a few protocols in place to comply with the law.
The notice will give the banks the option to store cryptocurrency transfers and copies of private keys into wallets controlled entirely by the banks. This might look like a big victory for the state’s cryptocurrency firms and users, though according to the department nothing much has changed.
The notice will empower banks with trust powers to offer fiduciary custody services i.e. they will have certain legal obligations to the clients. This means the banks can also keep the asset safely and return it unharmed upon request.
State-chartered banks provide financial institutions more choice compared to federal charters. Though the Texas state banking charters have since 1999, provided super parity with national banks. This means banks chartered in Texas can do anything a federally chartered bank can do. Making Texas a desirable place for financial institutions to do business. According to the Federal Deposit Insurance Corporation after California, Texas has the second most banks in the country.
Apart from Texas, others such as Wyoming also have tried to attract crypto-based companies. While a series of blockchain laws gave cryptocurrency exchange Kraken the opportunity to earn the state’s first special-purpose depository institution license, followed by Avanti.
The charters enable these crypto banks to not only provide custody but also settle trades between cryptocurrencies and the US dollar and also create their own stablecoins.
Federally chartered crypto banks such as Anchorage, Paxos, and Protego, are different as they have licenses that allow crypto firms to avoid compliance issues related to money transmitter laws in 50 states. Though they cannot take customer deposits or access the Federal Reserve’s payment system.
According to an advisory issued last year by the Office of the Comptroller of the Currency (OCC), the country’s top banking regulator last year similar to Texas confirmed cryptocurrency custody services are within national banks’ purview. This was followed by a letter in January that allowed banks with national charters to use blockchains and stablecoins for payment activities.
Michael Hsu, OCC Acting Comptroller, has called for a review of the cryptocurrency guidelines issued under his predecessor, Brian Brooks, a former Coinbase executive, and current Binance.US CEO. However, this review will only apply to OCC-chartered banks and credit unions.
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