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Texas banks may start offering cryptocurrency services for customers | Money Smart

The biggest concern in crypto investment is figuring out how to safely secure the digital asset. If state-chartered banks want, they can store it for customers.

SAN ANTONIO — The biggest concern in cryptocurrency investment is figuring out how to safely secure the digital asset. The Texas Department of Banking says if state-chartered banks want, they can store crypto for investors.

The Texas Department of Bank issued a note that says state-chartered banks can offer cryptocurrency custody services. The department says while virtual currencies are unlike traditional assets, state-chartered banks have always had the authority to provide this service under Texas Finance Code § 32.001. 

Marcus Adams, Texas Department of Banking assistant general counsel, would not say if banks in the state sought clarification to store virtual currency. He says the guidance is to address the growing popularity of the asset.

“The department’s industry notice didn’t change the law. It didn’t create a new law. All it served to do was clarify,” explained Adams. “We know it’s [cryptocurrency] rapidly growing and evolving. How the Texas state-chartered banks decide to respond to that growth is ultimately, up to them. In our world, we want to make sure banks are aware of the tools that are available to them.”

The department says banks can choose to offer services based on their expertise, risk appetite and business model. They are authorized to store customer’s private keys, create copies of the keys or transfer the cryptocurrency and allow the bank to have direct control.

“I would recommend the bank really do a deep dive into their risk management and other controls to ensure that they’re prepared to take on the additional risk that are inherent with custody of virtual currency. Crucial success of this bank endeavor is really going to be proving to their customers and the regulators that they have a demonstratively safe and secure solution,” said Adams.

KENS 5 reached out to several banks in Texas to see if they are offering this service to customers. A spokesperson for Frost Bank said that they are considering opportunities around cryptocurrencies, but don’t have any definite plans at this time. A Jefferson Bank spokesperson said while they do not have immediate plans to provide cryptocurrency custody services, their staff is preparing to eventually provide this service for customers.