Hawaii Banks Expected to Offer Crypto Custody

The Hawaii State Senate introduced a bill that allows commercial banks to provide custody for cryptocurrencies.

Five state senators introduced the bill on Jan. 17, then referred to the committees on Judiciary and Commerce, and Consumer Protection and Health.

The bill defines a set of provisions that the bank must abide with in order to provide custody services for digital currencies. These services cover safekeeping, managing customer’s digital assets through the exercise of fiduciary powers under this section as a custodian and includes managing funds and implementing customer instructions.

A bank must adhere to certain standards in order to qualify as a crypto custodian, including accounting and internal controls, IT best practices, and comply with federal Anti-Money Laundering and KYC requirements.

If this bill passed and becomes law, it would set out a framework that allow compliant banks to become a crypto custodian, and eventually will make Hawaii take a lead over many states in cryptocurrency industry.

According to the bill, banks could be authorized to transact with customers’ cryptocurrencies. “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”.

It is worth mentioning that, Hawaii state has previously imposed tightened requirements on firms dealing with digital currencies, as a result Coinbase exchange to freeze its operations in the state almost 3 years ago.

In a related context, Gemini, a New York-based digital currency exchange, announced today that it has finished a second-level security evaluation by auditing giant Deloitte.

Yusuf Hussain, Gemini’s head of risk, said, “The Type 2 is the highest level of security compliance that any organization can demonstrate.”

The company had completed Deloitte’s first-level security evaluation in 2019. This reflects the exchange’s keenness to comply with security measures, especially as it aims to boost its customer confidence.

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