With the recent increase in Bitcoin adoption, the Texas Department of Banking has confirmed that Texas state-chartered banks will now be allowed to store BTC and other cryptocurrencies for their clients.
Texas Banks to Hold Bitcoin
In an official notice issued Friday, the regulator noted that state-chartered banks can provide crypto-related services to their clients as long as they have “adequate protocols in place to effectively manage the risks and comply with applicable law.”
The financial agency also explained that since these digital currencies exist on the blockchain, holders will have to access them using private keys.
As a result, banks can either store clients’ private keys for them or hold the crypto assets in the bank’s custody, with total control over its new private keys. Whichever way, the decision is entirely up to 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 the level of security and accessibility. The bank will have to determine which storage option best fits the circumstances.”
Banks Can Partner Crypto Exchanges
The agency also stated that the bank needs to confirm the existence of adequate coverage with its insurance carrier to guarantee the safety of clients’ crypto assets.
To be on the safe side, banks are advised to seek professional knowledge of the risks associated with dealing with cryptocurrencies.
The Texas Department of Banking also said that banks can partner with cryptocurrency exchanges to help them provide these services to their clients.
While crypto businesses might see this as a new and welcome development, the agency noted that it is not entirely new within its department.
“Texas state-chartered banks have long provided their customers with safekeeping and custody services for a variety of assets,” the regulator wrote.
“While custody and safekeeping of virtual currencies will necessarily differ from that associated with more traditional assets, the Texas Department of Banking believes that the authority to provide these services with respect to virtual currencies already exists pursuant to Texas Finance Code § 32.001.”