The Senate of the Commonwealth of Virginia passed a bill allowing banks to offer custody services for Bitcoin and other cryptocurrencies. Banks will follow self-assessment criteria to determine whether or not to offer custody services.

In early January 2022, delegate Christopher T. Head, Senate member for the state of Virginia, introduced Bill 263 to allow traditional banks operating in the Commonwealth of Virginia to offer custody services for Bitcoin and other cryptocurrencies. “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 outlines.

In order for banks to be able to offer such services, they would have to go through a methodical self-assessment process that requires them to carefully consider the risks associated with offering such services, the bill says. It aims to allow the banking infrastructure to participate either in a fiduciary or non-fiduciary capacity.

If a bank wants to operate in a fiduciary manner, it “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.”

If the bank wants to operate in a non-fiduciary capacity, the bank “shall act as a bailee, taking possession of the customer's asset for safekeeping while legal title remains with the customer, meaning that the customer retains direct control over the keys associated with their virtual currency.”

With an overall score of 39-0, the bill heads to Governor Glenn Youngkin's desk to be signed into law, reported Bitcoin Magazine.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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