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The new Virtual Currency Bill passed by Texas and the state banking committee gives all banks the right to offer crypto custodial services to its clients.
As cryptocurrencies continue gaining popularity among lawmakers, Texas doesn’t want to feel left behind. On Sunday, June 13, Texas Governor Greg Abbott signed a law that puts digital currencies under the Texas Uniform Commercial Code.
I just signed a law that puts virtual currency under the Texas Uniform Commercial Code to be a secured transaction.
It defines virtual currency, establishes when a person acquires a right in it, and when a person has control of it.
— Greg Abbott (@GregAbbott_TX) June 13, 2021
Soon after the Texas Deparnment of Banking also sent out an industry noice providing other state-chartered banks the authority to offer safekeeping and custodial services for digital assets. As of February 2021, over 200 state-chartered banks in Texas come under the department of banking. Marcus Adams, the state banking department’s assistant general counsel said:
“Texas is seeing the rise in the virtual currency industry and trying to get out ahead of it and ensure our regulated banks are prepared to remain competitive”.
This isn’t any new law specifically for digital assets. Instead it’s just that the state has allowed digital currency under the existing laws. as said by the governor, the law “defines virtual currency, establishes when a person acquires a right in it, and when a person has control of it”.
Understanding the Implications of the Texas Law on Digital Currencies
If a Texas native currently holds and Bitcoin or other digital assets, he/she holds the private key in the wallet to access these digital assets. But getting digital assets under the law allows them to turn this responsibility to a third-party bank. Either the customer can fully transfer the digital assets to the bank or the bank can store the copy of the keys.
However, it doesn’t mean that all the banks in Texas will take the responsibility of holding the private keys. Adams noted that banks need to first assess if they have the proper risk-managment structure in place. Also, Texas is not the first state to recognize blockchain and digital assets in its Uniform Commercial Code.
Last week, Abbott tweeted:
“Blockchain is a booming industry that Texas needs to be involved in. I just signed a law for Texas to create a master plan for expanding the blockchain industry in Texas”.
Just similar to Texas’s Virtual Currency Bill, Wyoming passed the ‘Digital Asset Bill’ back in 2019. This has helped the state of Wyoming emerge as a hub for Bitcoin investors. These two bills bring basic legal rights for crypto companies.