Bitcoin Holders Will Soon Be Able to Store Crypto at Louisiana Banks Under Pending Law


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Despite the decline in the wider crypto market, this pending law could be a sign of brighter things to come.


Key points

  • The Louisiana House of Representatives website shows that the governor signed Bill 802 on June 15, 2022, and it will become law 10 days from that date of signing.
  • The intent of this new Pelican State legislation is to “allow financial institutions and trust companies to serve as custodians of digital assets; provide for parameters and procedures; and provide related matters.”

Over the past 24 hours, the cryptocurrency market has lost $ 66.85 billion in value – a decline of 8.52% – to a total valuation of $ 900.2 billion according to CoinMarketCap. Despite this most recent drop, along with the $ 1 trillion aggregate loss of $ 1 trillion so far this year as the cryptocurrency market continues, that doesn’t stop some lawmakers from planning the next cryptocurrency market.

Last week, Louisiana Gov. John Bel Edwards signed Bill 802, which will become law 10 days after it is signed, allowing banks and other financial institutions to store cryptocurrencies like Bitcoin on behalf of customers.

“A financial institution or trust company may provide its customers with virtual currency custody services if the financial institution or trust company has appropriate protocols in place to effectively manage risks and comply with applicable laws. A financial institution or company may provide virtual currency custody services through third party service providers. risks involved in offering such services through a methodical self-assessment process “, an excerpt for the legislation.

Highlights of the pending Louisiana cryptocurrency bill

The bill has other interesting provisions, the first would require banks to provide comprehensive insurance to cover and ensure the restoration of losses from hacking or cyberattacks. This type of offer is not available on most cryptocurrency exchanges or digital wallets.

The legislation would also allow financial institutions to act as a non-fiduciary or fiduciary custodian of cryptographic assets. In the first instance, the bank or trust company would only hold the assets to guard them while the client retains the legal title and private keys needed to trade the cryptocurrencies. In the second instance, acting as a trustee on behalf of the client, the bank or trust company would take control of the cryptographic and private keys so that the institution can actively negotiate and manage the portfolio on behalf of the client as it would with the shares. bonds, publicly traded funds or mutual funds.

Pending Louisiana law is like a double-edged sword

This legislation is important because it looks to the future when cryptocurrencies are more widely adopted by everyday users, while helping to accelerate that adoption by using banking channels known as ramps for new users. In addition, this law could serve as a possible policy model for other states.

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However, while this pending law is likely to help incorporate new entrants into the crypto industry, the centralization of digital assets with banks and financial institutions will not sit well with crypto purists. Those individuals dogmatically believe in the underlying libertarian ideology of Bitcoin and crypto as alternatives to fiat currencies and financial intermediaries. The promise and premise of Bitcoin is that it was intended to be a peer-to-peer exchange method, reliable unit of account, and superior value store.

It remains to be seen whether this legislation will be an aid or an obstacle to the cryptocurrency sector.

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