Virginia Banks to Offer Digital Currency Services

The United States Virginia Senate recently approved a bill amendment that will allow certain banks to offer custody services for bitcoin and other digital assets. However, in order to offer digital services, banks must meet a total of 26 predetermined protocols. 

Bill 263 and Bank Protocols   

The amendment came from a bill that was originally introduced back in January 2022 by delegate Christopher T. Head. Mr. Head’s introduction of the bill, Bill No. 263, included the following statement:  

“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.” 

The bill was approved by a 39-0 vote and now awaits a signature from the governor of Virginia, Glenn Youngkin. 

Bank requirements are focused on a specific set of guidelines aimed at managing risks, which include implementing risk management systems, obtaining related insurance coverage, and maintaining an oversight program.

For customers to transfer their virtual currencies to their chosen bank, new private keys will also have to be created per their respective digital assets.  

In respect to using private keys and their purpose, the senate provided insight stating that, “Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank.” 

Nationwide Digital Asset Considerations  

Virginia is among just one of the states looking to add cryptocurrency into their legislation. Wyoming, for example, recently brought a bill forward focused on state-issued stablecoin, titled “The Wyoming Stable Token Act.”  

Lawmakers are still debating on whether it's better to make decisions on stablecoins and other digital assets at the state or at the federal level. However, some lawmakers, like Patrick McHenry, a representative of North Carolina, are calling for states to make decisions instead of federal authorities.