Banks in Hawaii, one of the fifty states in the US, would be able to provide cryptocurrency custodial services to investors under a new bill introduced by the state’s lawmakers late last week, should it pass approval.
If successful, the legislation would grant Hawaiian banks the right to hold and manage digital assets such as digital consumer assets, digital securities, and cryptocurrencies for their customers.
The bill, which has already passed its first reading on Tuesday, is co-sponsored by multiple senators including Sen Gil Riviere, Sen Sharon Moriwaki, Sen Stanley Chang, and Sen Les Ihara from the Democratic Caucus and Sen Kurt Fevella from the Republican Party.
Digital Assets As Property
For the bill, all digital assets are considered intangible property. However, digital consumer assets shall be regarded as general intangible. Digital securities shall be considered both securities and investment property, while virtual currencies shall be considered money.
Digital assets, while considered intangible property, may also be treated as financial assets under section 490:28—102, but not without a written contract with the owner of the digital asset, the bill reads.
The regulatory uncertainty surrounding cryptocurrencies has discouraged many banks from dealing with digital assets in the US. However, Hawaiian lawmakers are set to change that with the bill.
The legislation would require banks interested in becoming crypto custodians to meet the requirements of a “securities intermediary” of section 490:8— 102. The banks would also be required to provide a 60-days written notice to the commissioner and pay an annual supervision fee of $1. Once the banks start providing custodial services, they would need to hire an independent public accountant to examine their digital records.
Another section of the bill further stated that the bank and digital assets owner would sign a written agreement that covers how long the banks would safeguard and manage the digital assets and when the assets shall be returned. During the period within which a bank would act as a custodian, the customer may authorize the bank to transact with the digital assets.
Having passed the first reading, the bill has been referred to both the Senate Committee on Commerce, Consumer Protection and Health (CPH), and the Senate Committee on Judiciary (JDC) for further examination. Nonetheless, the bill still has a long way to go.
Banks And Crypto Management
Although the crypto industry already has some qualified crypto custodial service providers like Gemini, who recently launched its in-house insurance firm, countries around the world are working to ensure that banks get involved in the management of digital assets for investors. Perhaps, famous crypto proponent, John McAfee, was right when he said Bitcoin custody would become the standard.
Just like Hawaii, Cryptopotato reported last month that Germany proposed a new bill that would allow banks to store the Bitcoin and other digital assets of their customers as from 2020.