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With the rising popularity of digital currencies such as Bitcoin (BTC) and Ether (ETH), even traditional banks are now mulling the possibility of launching their own crypto-related services. Recognizing this demand, the Senate of Virginia has unanimously approved a bill that allows state banks operating in the Commonwealth of Virginia to offer virtual currency custody services to their clientele.
House Bill No 263 was submitted by Delegate Christopher T. Head in January 2022. The bill sought to amend the Code of Virginia to allow eligible banks to offer crypto custody services, according to Cointelegraph.
“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,” House Bill No. 263 reads. “Prior to a bank offering virtual currency custody services, the bank shall carefully examine the risks involved in offering such services through a methodical self-assessment process.”
The Senate of Virginia approved the bill in a 39-0 vote and is now for Governor Glenn Youngkin to sign into law. However, the bill also stipulated three requirements for banks that plan on offering crypto custody services to their clients.
Banks should “implement effective risk management systems and controls to measure, monitor, and control relevant risks associated with custody of digital assets such as virtual currency.” In addition, they should have adequate insurance coverage before offering the service and must “maintain a service provider oversight program to address risks to service provider relationships as a result of engaging in virtual currency custody services.”
Banks may act in a nonfiduciary or fiduciary capacity when offering crypto custody services. “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.”
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