Hawaii: Lawmakers Introduce Bill That Enables Banks to Offer Crypto Custody Services

According to a report by The Block published on January 24, 2020, five lawmakers from the U.S. state of Hawaii have introduced a bill that seeks to enable commercial banks to provide custody for cryptocurrencies.

Hawaii Could Witness Crypto Boom

In a fresh pro-crypto regulation movement in the U.S., Hawaii has introduced a bill that could make it legal for banks to provide digital currency custody services. If the Senate bill 2594 gets through to the Senate Committee, it would make it legal for Hawaiian banks to hold digital assets, including “virtual currencies,” “digital currencies,” and “open blockchain tokens” for their customers.

Notably, Senate bill 2594 has been signed by four Democratic senators – Gil Riviere, Sharon Moriwaki, Stanley Chang, Les Ihara – and one Republican senator Kurt Fevella. The bill was introduced last week and has passed the first reading. The bill has now been referred to the Senate Committee on Commerce, Consumer Protection and Health (CPH) and the Senate Committee on Judiciary (JDC).

Most interestingly, the new bill also requires banks to maintain reserves just like a trust company under section 412:8-202. The section states in part:

“Every trust company shall have on hand at all times in actual money of the United States an amount equal to at least twelve per cent of all agency credit balances payable on demand and of accounts payable, plus at least five per cent of all agency credit balances payable on time; provided that such reserve may be deposited payable on demand in banks and other trust companies approved by the commissioner or may be cash in the vaults of the trust company.“

The bill also allows customers to authorize banks to transact with their cryptocurrencies. According to the bill, “A bank and a customer shall agree in writing regarding the source code version that the bank will use for each digital asset […] Any ambiguity under this subsection shall be resolved in favor of the customer.”

Regulations Elsewhere in the World

Although 2020 is yet to go past January, financial watchdogs the world over have already taken a few promising pro-crypto decisions that could make the rest of the year a watershed year for the digital currency industry.

As reported by BTCManager on January 16, 2020, Malaysia’s Securities Commission (SC) had published a regulatory framework for Initial Exchange Offerings (IEOs).