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State-chartered banks in Texas have been given the green light to custody crypto assets on behalf of their customers, a state regulator announced Thursday.
The guidance is not representative of new law, but an affirmation that state-chartered banks are allowed to provide crypto custody services as long as there are adequate protocols in place and the banks are complying with existing legal frameworks, according to a June 10 notice posted on the Texas Department of Banking’s website.
According to the notice, the types of custody services offered by state-chartered banks may differ depending on each bank’s expertise, risk appetite and business model. Banks may offer either fiduciary and non-fiduciary custody services, which could range from safely storing copies of a customer’s private keys to directly controlling crypto assets, including holding private keys, on behalf of its customers.
The Texas Department of Banking’s notice comes amid a booming presence from the crypto industry in Texas. Miners and crypto startups have been moving to Texas in record numbers to take advantage of the state’s relatively cheap energy and crypto-friendly regulatory environment.
Texas lawmakers, including Governor Greg Abbot, now must provide legal clarity to crypto companies and investors in the state.
The regulator’s notice looks much like the guidance published for federal banks by the Office of the Comptroller of the Currency last July. However, according to Marcus Adams, assistant general counsel at the Texas Department of Banking, the state is not taking its crypto guidance from the federal government, but making decisions based on the growing popularity of crypto in Texas.
“Both at the state and federal regulatory agencies, we’re seeing a rise in the virtual currency industry as it continues to evolve,” Marcus said. “We expect our banks to start seeing demand from their customers and we want them to be prepared for that.”
”The point of the notice is to make it clear to banks that under the existing law, they can provide these services,” Marcus said. “How soon we see Texas state-chartered banks actually start offering these and get these products and services in place is really dependent on the individual banks and what kind of resources they have available.”