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US Senate approves crypto custody services in Virginia

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Last Thursday, March 3, the United States (US) Commonwealth of Virginia passed the House Bill No. 263 with an amendment that allows eligible banks from the state to provide crypto custody services. It was unanimously approved with a 39-0 vote and was signed by Governor of Virginia Glenn Youngkin as found on the official legislative system of the state.

Back in January 2022, Delegate Cristopher T. Head introduced the bill while asking for an amendment that allows banks to offer crypto custody services. The official document stated that ‘a bank may provide its customers with virtual currency custody services so long as the bank has adequate protocols in place to effectively manage risks and comply with applicable laws’ as found on the official website of the government of Virginia.

In the same document, it was noted that there are three requirements that are necessary for banks that intend to offer virtual currency custody services. Firstly, they need to ‘implement effective management systems and controls’ for the monitoring and checking of possible risks related to digital assets. 

The second requirement would be to make sure that they have enough insurance coverage to provide these services. Meanwhile, the third is to ‘maintain a service provider oversight program’ which is necessary to resolve any issue relating to service provider relationships for people who use the crypto custody services.

On another hand, the clients of the bank cannot retain control over the public and private keys to their accounts. According to the Senate, ‘acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank’.

Apart from Virginia, other states in the US like Wyoming have introduced cryptocurrency-related laws, particularly a state-issued stablecoin. Last February 17, Wyoming state Senators Chris Rothfuss and Tara Nethercott along with House Representatives Jared Olsen and Mike Yin proposed the Senate File SF0106 known as the ‘Wyoming Stable Token Act’ as reported by crypto news site Cointelegraph. According to CEO of Avanti Financial Caitlin Long, the bill has its pros and cons but it is ‘definitely a conversation starter’.

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