Virginia, one of the reddest states in the union, is in the news for a somewhat surprising reason. The state’s recent decision to permit its banks to offer custodial services in support of virtual currency represents a tip of the cap to the decentralize finance (DeFi) movement that continues to gain steam with each passing day. Virginia Governor Glenn Youngkin demonstrated admirable irreverence for convention by giving the state’s banks the green light for crypto custodial services this past Monday.
Details About Virginia’s New Crypto Law
Virginia’s custodial services crypto law pertaining to banks will be official as of July 1. The law will permit banks within the state to hold crypto users’ digital wallet keys. The details of the legislation were recently provided by Chris Head, the state’s Republican Delegate who originally introduce the bill.
Cryptocurrency investors are wise to pay attention to this important piece of legislation including its language as it might be used as a model for other state governments in the event that crypto continues to gain nationwide momentum.
Virginia banks must maintain sufficient protocols in place in order to comply with the letter of the law. The state’s banks must also closely analyze all potential risks as stipulated by the bill. However, the nuances of how the bill will be worded have not been fully defined. The language of the bill will be finalized in the weeks and months ahead.
It is anticipated that the bill’s wording will be decided on when talks between the State Corporation Commission and state bankers occur. The anticipated timeline for the bill’s completion was hinted at by the legislation’s co-sponsor in Virginia Democratic Delegate Mark Keam.
Virginia Lawmakers Sound Off
Keam stated he believes the new legislation is an opportunity for the state to steer cryptocurrency into the mainstream. Keam also believes Virginia’s bold action in the context of banking and crypto will also steer the rest of the nation toward eventually accepting cryptocurrency as a legitimate form of payment for products and services and also as a legitimate investment security.
According to Keam, the new legislation pertaining to Virginia banks makes crypto that much more tangible. Keam notes crypto is more meaningful and valuable when it has a physical component rather than merely being a string of letters and numbers on a screen. The physical component of crypto is available when people walk into Virginia banks and deposit virtual crypto into an account where it is protected by the financial institution.
Keam’s hope is that the new law reduces Virginians’ anxiety about crypto and the blockchain tech as a whole. After all, Virginians are familiar with banks and financial services so it only makes sense that there is compatibility between these traditional financial institutions and cryptocurrency.
Virginia Could Become Crypto Central
Head, the politician who originally introduced the bill, is adamant that the legislation will provide his home state with a significant competitive advantage as the use of crypto continues to become economically and socially normative. Head made a statement in which he noted how the rest of the country is now paying attention to Virginia and anticipating the acceptance of crypto to catalyze the state’s economic development.
Head also credited Texas for inspiring him to draft the bill. Head highlighted how the Texas Department of Banking permitted banks that were state-chartered to custody cryptocurrency in the summer of 2021. Furthermore, the United States Comptroller of the Currency that regulated banks which are federally chartered, made a similar decision in the summer of 2020.