The Nebraska legislature on Monday approved a bill that would allow firms to register as cryptocurrency depositories as long as they maintain an office in the state and have at least one Nebraska resident on their board.
The bill, the Nebraska Financial Innovation Act, would allow existing banks to custody cryptocurrency through the creation of digital asset departments. It would also allow firms to apply for charters to act as standalone digital asset depository institutions so long as they use the term “Digital Asset Bank” to identify and market their services.
If enacted, the bill would make Nebraska the second state after Wyoming to allow banks to accept crypto deposits.
“Not only does this change the way we regulate banking in Nebraska, it is an opportunity to create more wages and commerce in our state,” said the bill's sponsor, Sen. Mike Flood (R), while addressing the legislature ahead of the vote today. “Banks need the ability to move with where people are going with technology.”
Nationally chartered banks can already do this. The proposed legislation would allow banks with Nebraska charters to accept crypto deposits as well.
Sen. Mike Flood (R), the bill’s sponsor, said the legislation was previously opposed by the Nebraska Bankers Association and Nebraska Independent Community Bankers, but have since said they are neutral on the matter.
Neither organization immediately returned Crypto Investor's requests for comment.
Last week, the bill unanimously cleared the Banking, Commerce and Insurance Committee, according to Sen. Flood, who spoke in support of the bill on the floor on Monday.
Sen. Flood said he decided to write and submit the legislation when speaking with blockchain startup Telcoin. The company at the time was considering a move to Wyoming to register as a crypto bank.
Telcoin, founded in 2017, allows users to send money over a mobile phone network. It was initially created to allow people who send money to their home countries, known as remittances, without having to pay high fees to do so.
"Operating in the decentralized financial space, where developers are building a completely alternative financial system, we recognize the difficulty regulators and legislators face in balancing consumer protection with innovation," said Telcoin VP of Strategic Partnerships Parker Spann. "We've decided to take the active approach and work side by side with legislators and the existing banking industry to help craft meaningful legislation which will bring clear guidance to operators and consumers, and we look forward to the result of LB-649 optimistically."
During today's session in the capitol, two amendments were added to the bill before it was approved.
One amendment prohibits the Nebraska Director of Banking and Finance and his or her employees to use information submitted on applications for personal gain.
Put plainly, the addition would make it illegal for officials will access to applications from using material non-public information to abuse that access by investing in a company that they know will have their application approved.
Another amendment clarifies what the crypto depositories can do, which does not include granting digital assets coverage by the Federal Deposit Insurance Corporation. It also requires digital asset banks to use that distinction, specifically, to identify and market themselves to prevent confusion.
A third amendment, concerning the inclusion of credit unions as institutions that can accept digital assets, was withdrawn.
Sen. Flood had not yet returned requests for comment from Crypto Investor.
The Nebraska legislature on Monday approved a bill that would allow firms to register as cryptocurrency depositories as long as they maintain an office in the state and have at least one Nebraska resident on their board. Subscribe for full article
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