Dated June 10, 2021, Texas Department of Banking in their Industry Notice 2021 – 23
Texas state-chartered banks may now store Bitcoin on behalf of their clients. This looks like they are okay for crypto adoption.
The notice makes an affirmation that Texas State-Chartered Banks can provide their customers with virtual currency custody services. However, the banks need to have the required protocols in place to effectively manage the risks to further comply with the applicable law.
Texas State-Chartered Banks have been long providing their customers with custody services and safe keeping for a variety of assets. These services are important in the banking business as customers look to banks to provide for secure and dependable storage.
Custody and safekeeping of virtual currency will differ from that of the traditional assets. Pursuant to Texas Finance Code Section 32.001 provides the authority to provide these services related to virtual currencies.
For clarity, virtual currency is a representation of the value intended for use as a medium of exchange, unit of account or store of value. Virtual currencies do not exist in the physical form. They are intangible and they exist on the blockchain DLT related to the virtual currency. The owner of the key holds the cryptographic key related the specific unit of virtual currency in a digital wallet. The key makes it possible for the rightful owner of the virtual currency to access and use the currency further.
It is the risk appetite and the expertise of the bank, which will determine the kind of custodial services they might be willing to offer. The bank can choose to permit the customer to have direct control over their virtual currencies and merely store copies of the customer’s private keys.
The customer can also transfer the control to the bank and create a new private key, which will in turn be held by the bank on behalf of the customer.
So, this just looks like a lineup of Financial Institutions gathering. We might hear more of such news.
El Salvador has made bitcoin legal tender. It was a bitcoin bill, not a crypto bill.
Will never understand this “only BTC” narrative. BTC deserves all the credit for what it started and what it has become. But like any new technology, innovations have been made. The space has evolved with smart contracts. Why is it that only Bitcoin when there are so many Altcoins is something that several cryptocurrency enthusiasts are left wondering?
There is only one way that gives you higher returns, that is to take higher risks. You could lose a lot too, but the higher risk, higher expected return relationship is a clear one. Protect unprivileged investors by educating them, not by denying them from participating.
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