Wyoming, a Western U.S. state on January 18 introduced a new bill to allow banks in the region to provide custodial services for digital assets. Several requirements including the approval by the U.S. Securities and Exchange Commission (SEC) have been outlined in order to regulate the management of these assets by banks.
Bill is Called Digital Assets-existing Law
The bill in question is called, “Digital assets-existing law” and it has a range of focus. Some of these are classifying cryptocurrencies using the existing law and outlining that virtual assets are a “property within the Uniform Commercial Code”. The bill also seeks to create a framework that will allow banks to be custodians of digital assets as well as the standards and procedures that need to be adhered to.
In line with that, the document has three classifications for digital assets and each has been explicitly defined. These classifications are digital consumer assets, digital securities, and virtual currencies. While the trio is labeled as an intangible property, virtual currency is defined as a store of value and a medium of exchange and therefore, is considered as money.
Banks Must Meet Requirements Before Storing Digital Assets
Custodian banks, on the other hand, will only safe keep and manage these digital assets if they meet the requirements of the bill. One of such is that they must be approved by the U.S. Securities and Exchange Commission (SEC). A financial institution must also provide a 60 days notice to the commissioner before offering its services.
Furthermore, a bank which manages a customer’s digital asset must comply with “federal anti‑money laundering, customer identification, and beneficial ownership requirements;”. Also, a stipulated time which the financial institution will have to return the customer’s cryptocurrency will have to be put in writing.
Digital Assets in a Bank’s Custody are Not its Assets
It is also worthy to note that the bill has outlined that digital assets kept with the bank are not its asset or depository liability. As such, a financial institution can only control these assets while acting as an investment adviser, broker-dealer, or investment company to its customers.
BTCNN on January 14 had reported of two bills also passed by this western U.S. State. One of the bills known as “Special purpose depository banks” outlined that banks must offer financial services to Blockchain companies. The document also pointed out the difficulties faced by these firms when it comes to accessing reliable banking services.