Texas banks with a national charter are now able to custody cryptocurrencies. According to the Texas Department of Banking, banks are allowed to store digital assets for clients. However, the notice released by the organization explains that financial institutions should follow the necessary protocols to be compliant with the law.
Texas Banks Can Hold Crypto
Banks in Texas that are compliant with the law and that have in place all the necessary security protocols can hold virtual currencies on clients’ behalf. According to the notice issued by the Texas Department of Banking, this is not something new. Indeed, the department explains that Texas state-chartered banks have always offered users the possibility to protect their assets.
Although there are differences in the way in which cryptocurrencies are stored, banks can already provide these services to clients. In this way, users can transfer virtual currencies to banks or even provide their private keys to financial entities so as to protect virtual currencies.
In the cryptocurrency market, when a user holds Bitcoin (BTC) or other virtual currencies, the most important thing to take into consideration are the private keys. These private keys show who has control over virtual currencies.
When users trade virtual currencies on exchanges such as Coinbase or Binance, the funds held on the platform are in the custody of the exchange. Instead, when we withdraw funds to a hardware wallet or a software wallet we control, we handle the private keys.
It is worth taking into consideration that banks in Texas have “super parity” with national banks. That means that Texas banks can offer the same services as federally chartered banks. In this way, financial institutions can settle their operations there.
The notice released by the Texas Department of Banking reads as follows:
“What virtual currency custody services a bank chooses to offer will depend on the bank’s expertise, risk appetite, and business model. For instance, the bank may choose to allow the customer to retain direct control over their own virtual currency and merely store copies of the customer’s private keys associated with that virtual currency.”
During the last months, the cryptocurrency market has been expanding at very fast rates. Indeed, El Salvador became the first country to make Bitcoin legal tender. That means that shops must accept Bitcoin as a means of payment for goods and services. Additionally, the government announced plans to mine Bitcoin using the energy produced by Volcanos. The impact on Bitcoin and the crypto market is definitely massive.