Hawaii, the US state, has taken a major step to strengthen the position of cryptocurrencies as the government has proposed a bill allowing banks to work as cryptocurrencies custodians for the investors. The highly anticipated bill, if passed, will authorize the Hawaiian banking institutions to hold, manage, and deal with virtual assets. The wide range of offerings to be provided by the banks after the passing of the legislation would include digital customer assets, cryptocurrencies, and digital securities.
According to the reports, the bill has cleared the first reading on January 21, 2020. The co-sponsors of the bill included some of the most renowned senators like Sen Stanley Chang, Sen Gil Riviere, Sen Les Ihara, and Sen Sharon Moriwaki, belonging to the Democratic Party and Republican Party Sen Kurt Fevella. Now, the bill has been passed on for further scrutiny to the Senate Committee on Commerce, Consumer Protection and Health, and the Senate Committee on Judiciary.
The bill will render the status of intangible property to all the digital assets, while consumer assets will be categorized as general intangible. The digital currencies will be regarded as money, while the digital securities will be referred to as securities and investment assets. The bill also affirmed that the digital assets could also be termed as financial assets under section 490:28—102, only after a written contract was signed with the owner.
As per the bill, the bank and the owner of the digital assets will need to sign a written agreement with each other describing the clear terms concerning the time period for which the bank will manage the assets and when shall it return it back to the owner. The customer will have the right to allow the bank to transact with his/her digital assets during the time period the assets are held by the bank.
The banks willing to become a custodian for cryptocurrencies will have to meet certain requirements to become eligible for the purpose:
- Satisfy the requirements of a “securities intermediary” of section 490:8-102
- Give a 60-day notice in writing to the commissioner
- Pay an annual supervision fee of $1 to the authorities
- After getting permission, the banks will have to appoint an independent accounts person for the examination of their digital records
Recently, a report conveyed that alike Hawaii, the German government has proposed a new bill that will allow banks to store Bitcoin and other digital holdings of investors from 2020.