Texas Authorizes State-Chartered Banks To Safe-keep Cryptocurrencies

The regulator equally expects the bank's management to conduct due diligence and proper examination of the risk associated with such services.

As at the time of writing this news, the following information was gathered;

The Texas Department of Banking, has reported that it has granted state-chartered banks the authority to provide Cryptocurrency custody services.

The regulatory body believes that the authority to provide these services with respect to virtual currencies already exists.

It was gathered that the directive from the Department of Banking was disclosed on Thursday in the following vein;
"Texas state-chartered banks may provide customers with virtual currency custody services, as long as the bank has adequate protocols in place to effectively manage the risks and comply with applicable law".

The Texas Department of Banking conceives that the authority to provide these services with regards to virtual currencies already exists pursuant to Texas Finance Code 32001 as custody and safekeeping of virtual currencies will necessarily differ from that associated with more traditional assets.

Other important updates from the news include;

Each bank will choose what crypto custody services to offer based on its own expertise, risk appetite and business model. Hence, the bank may , for example, allow customers to retain direct control over their own cryptocurrencies and merely bstore copies of their own private keys associated with the coins. On the other hand, the bank may assume control of customer's crypto currencies, creating new private keys that will hold on behalf of customers.

The Texas banking regulator has disclosed that by providing Texas state-chartered banks with such authority, can provide services in either a fiduciary or non-fiduciary dimension.

Furthermore, on the course of offering custody services in a fiduciary dimension, it would control the customer's cryptocurrencies and any other asset held in such dimension.

In conclusion, the regulatory body has also directed that diligence and proper examination of risks associated with new products or services must be conducted by the bank's management through a methodical risk assessment process. And in the case of continuation with crypto services, an effective risk management system and control must be applied to measure, monitor and control relevant risks associated with custody of digital assets.

What are your thoughts about Texas authorizing state-chartered banks on the provision of Cryptocurrency services?