The Virginia Senate unanimously approved a bill on Friday that will allow banks in the state to provide cryptocurrency custody services if they have the resources to manage the risk. When Virginia Governor Glenn Youngkin signs the measure, it becomes effective.
The bill basically authorizes banks to store customer wallet keys, and it is aimed mostly at institutional investors with substantial crypto holdings.
Delegate Christopher T. Head sponsored bill no. 263, which aimed to capitalize on the growing popularity of cryptocurrency.
“By codifying the ability for state-chartered banks to become custodians of cryptocurrency,”
“this will make Virginia the first in the country to provide this ability to banks through legislation.” Delegate Head to Fox News
The Virginia move is part of a growing trend in which states in the United States race to regulate cryptocurrency. While the space is recognized at the federal level, few states have complete crypto rules. Colorado became the first state to accept Bitcoin and other popular altcoins as tax payments earlier this month.
Several states attempted to entice investors through favorable regulation as the crypto market grew through 2021. According to the National Conference of State Legislatures, 33 states had introduced crypto-related legislation in 2021.
Wyoming and Arizona have also introduced legislation that would allow residents to pay taxes in cryptocurrency. Arizona has also introduced legislation to make Bitcoin legal tender in the state.
Eric Adams, the mayor of New York City, has likewise agreed to take his first three salaries in cryptocurrency.
Crypto custody is not the same as a traditional wallet, and it caters to institutional investors. Coinbase is now one of the leading providers of crypto custody services, but Virginia’s decision could increase competition in the industry.
Since 2021, a number of other exchanges and institutions have started offering custody services. Keeping one’s wallet keys with a custody provider gives an added layer of security to one’s crypto holdings, as the key holder becomes the customer’s primary point of access to crypto markets.
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