• Texas will make it possible for state banks to hold bitcoin

  • According to the OCC, banks with a national charter can already hold crypto. Texas claims that this is also true of its state-chartered banks.

    The Texas Department of Banking released a notification today clarifying that state-chartered banks may store cryptocurrencies on behalf of their customers as long as they have “sufficient mechanisms in place” to comply with the law.

    Though this appears to be a significant success for the state’s bitcoin businesses and users, the government believes that nothing has changed.

    It noted, “Texas state-chartered banks have traditionally provided safekeeping and custody services for a range of assets to their customers.” “While virtual currency custody and safekeeping will inevitably differ from those of traditional assets, the Texas Department of Banking believes that the power to provide these services with respect to virtual currencies currently exists pursuant to Texas Finance Code 32.001.”

    The notice allows banks to hold copies of private keys or even accept bitcoin transfers into wallets that are wholly controlled by the banks. They may also work in collaboration with third companies to deliver these services.

    Furthermore, banks with trust powers may provide fiduciary custody services, which means they owe the client specific legal obligations, such as “keeping the asset safely and returning it unharmed upon request.”

    State banking charters differ from federal charters in that they give financial organizations more options. Texas state banking charters, on the other hand, have offered “super parity” with national banks since 1999. In other words, a Texas-licensed bank has the same authority as a federally chartered bank. As a result, Texas is a popular location for financial institutions. According to the Federal Deposit Insurance Corporation, it has the second-highest number of banks in the country, trailing only California.

    Wyoming has pushed aggressively to attract cryptocurrency-related businesses outside of Texas. Last year, a slew of blockchain laws paid off, with cryptocurrency exchange Kraken becoming the first special purpose depository organization in the state, followed by Avanti. The charters give these “crypto banks” the authority to not only provide custody, but also to settle trades between cryptocurrencies and the US dollar—and even to issue their own stablecoins.

    These institutions differ from federally chartered crypto banks Anchorage, Paxos, and Protego, which have licenses that let them to circumvent compliance concerns with money transmitter regulations in 50 states but do not let them to accept consumer deposits or use the Federal Reserve’s payment system.

    Last year, the country’s top financial regulator, the Office of the Comptroller of the Currency (OCC), issued a recommendation similar to Texas’. The letter confirmed that national banks can provide bitcoin custody services. In January, a letter was issued that authorized banks with national charters to use blockchains and stablecoins for payment purposes.

    Acting Comptroller Michael Hsu, a former Coinbase executive and current CEO of Binance.US, has called for a reconsideration of the cryptocurrency guidelines issued by his predecessor, Brian Brooks. However, only OCC-chartered banks and credit unions would be subject to the assessment.

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