Home > News > Bill allowing state banks to custody digital assets proposed by Senator Flood

Bill allowing state banks to custody digital assets proposed by Senator Flood

Flood’s next plan of action is to push for bills intended to make his district a FinTech hub

Nebraska state senator Mike Flood, sworn in just earlier this month, has introduced the Transactions in Digital Assets Act and Adopt the Nebraska Financial Innovation Act to the state’s 107th Legislature. The crypto-friendly legislation lays out guidelines to enable state banks to be able to offer custody for digital assets.

The bills, if passed by the legislature, could lay the foundation towards developing Nebraska into the next regulatory safe haven for FinTech firms in the United States and attract innovators from abroad.

Republican Flood also proposes the creation of financial institutions dealing in digital assets whose “charter, operation, supervision and regulation” is determined by the state. He argues through the proposed bills that such measures would give local courts the jurisdiction to hear claims in both law and equity relating to digital assets.

The proposed legislation is now expected to move for consideration by a committee before being introduced in the state legislature.

The second bill explains that the rapid innovation of blockchain and digital ledger technology, including the growing use of virtual currency and other digital assets, has resulted in many innovators and consumers being unable to access secure and reliable banking services. It adds that this has hampered the development of blockchain services and products in the marketplace.

“Many financial institutions in Nebraska and across the United States [refuse] to provide banking services to blockchain innovators and customers and also [refuse] to accept deposits in the United States currency obtained from the sale of virtual currency or other digital assets”, the bill explained.

Senator Flood, who was the speaker of the Nebraska Legislature until 2013, said that his next plan of action was to push for bills intended to make his district a FinTech hub. He further described the crypto market as a “great opportunity” for Nebraska in a meeting of the Norfolk Chamber of Commerce’s Governmental Affairs Committee last Wednesday.

“This is the future,” said Flood. “To be on the cutting edge of [crypto], I think, is good for us. We need to be a leader in FinTech. We in Norfolk have as much right to this new market as any other place in America”, he explained.

Currently, a July 2020 legislation by the Office of the Comptroller of the Currency enables federal banks to provide custody for cryptocurrency. If successful, Senator Flood’s initiative will extend this benefit to all state-chartered banks in Nebraska.

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