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Last month, the Texas House of Representatives enacted legislation to recognise cryptocurrency under commercial law.
A Texas state regulator has formally confirmed that state-chartered banks in Texas are permitted to keep cryptocurrencies such as Bitcoin (BTC) for their customers.
The Texas Department of Banking, a state regulatory agency chartering state banks and supervising financial services, issued a notice on Thursday stating that local banks are permitted to provide crypto services in the state.
The agency noted that Texas banks “may provide customers with virtual currency custody services, so long as the bank has adequate protocols in place to effectively manage the risks and comply with applicable law.”
The regulator provided a brief overview of cryptocurrencies, emphasising that digital currencies do not exist in physical form, but rather on a blockchain, and hence require the owner to retain private keys in order to access them. The authority also indicated that banks can store crypto on behalf of consumers, either by storing copies of the customer’s private keys or by directly retaining the assets in the bank’s custody by establishing new private keys owned by the bank.
“As with the method of custody services, several secure storage options are available to the bank, each of which has distinctive characteristics pertaining to level of security and accessibility. The bank will have to determine which storage option best fits the circumstances,” the agency wrote.
In order to protect its crypto assets, the department also advised the bank to establish the availability of proper coverage with its insurance provider.
The regulatory warning comes shortly after the Texas House of Representatives passed a measure last month to recognise cryptocurrency under commercial law. Wyoming and Nebraska, for example, have been actively adopting crypto custody services by state-chartered banks, with Wyoming chartering Kraken exchange as its first crypto bank in September. In July 2020, federally chartered banks will also be authorised to provide crypto custody services.