![]() “For the last 10 years, places like Austin, Boston and San Jose have been leading in job growth and creation,” Flood said. It created a state banking charter that lets new companies become digital asset depositories and authorizes state-chartered banks to operate digital asset divisions. Mike Flood, the Nebraska Financial Innovation Act, became law. In May, a bill sponsored by Republican state Sen. “We hope that it will soon, but we really do have to accommodate the timelines of folks like the Fed.” “Our road map is as fluid as it has to be given regulatory timelines, but the bank doesn't have any customers currently,” said Marco Santori, chief legal officer of Kraken Digital Asset Exchange. A month later, Avanti Bank was approved.īoth are waiting for the Federal Reserve to approve their applications for a master account, which is necessary for a financial institution to have direct access to the central bank's payment systems. In September 2020, the Wyoming Banking Division approved Kraken’s application for the charter. “Wyoming’s charter is hyperfocused on solvency and is the polar opposite of Wall Street’s highly leveraged, highly rehypothecated regime.” “Wyoming’s SPDIs are subject to a straightjacket: They cannot rehypothecate customer assets, even if a customer wants them to,” said Caitlin Long, founder and CEO of Avanti Bank in Cheyenne and a two-decade veteran of Wall Street. Though some have questioned Wyoming's approach, those behind the charter say it was carefully thought out. They are prohibited from lending and must invest 100% of customer deposits in cash, Treasury bills and other high-quality liquid assets. Companies that receive this charter become banks that can receive deposits and provide custody, asset servicing, fiduciary asset management and related activities. In 2019, Wyoming created a special-purpose depository institution charter. The New York State Department of Financial Services did not respond to a request for an interview, but its website lists 26 virtual currency companies to which it has granted a license, including Circle Internet Financial, Coinbase, Gemini Trust and NYDIG. It does not offer a crypto bank charter per se, but it does provide the so-called BitLicense, a business license for virtual currency activities, and limited-purpose trust charters. In a way, New York was the pioneer in this area. Their efforts also have shown that bankers' initial objections to crypto banks tend to wear off when banks are given the same rights crypto companies are granted. The work these states have done and the rules they have developed could serve as blueprints for any national framework and what crypto banks will look like in the future. Illinois has proposed legislation to do the same, but it has not been approved. Wyoming and Nebraska have created special-purpose bank charters and a set of rules for startups and existing banks that want to provide services related to digital currencies. ![]() ![]() As top federal officials like Janet Yellen, Jerome Powell and Gary Gensler debate how cryptocurrency and the companies involved in it should be regulated, and members of Congress consider 18 bills tied to digital assets, states are quietly enacting their own laws and issuing charters for crypto companies.
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