Texas Banks Now Offer Crypto Custody Services
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Texas Banks Now Offer Crypto Custody Services

Texas, a state with a GDP bigger than Russia's, has allowed banks to store their clients' crypto assets.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

The current total cryptocurrency market cap is over $2.2 trillion USD, recently surpassing that of Apple, Amazon, and Google. The still-emerging asset class of virtual currencies carries with it high risk and volatility.

With so much money continuing to pour into the industry, government acceptance and intervention is inevitable. As the cryptocurrency space continues to grow, it will be essential for governments to work with institutions and individuals alike to make investing more secure for all involved.

Texas Banks Provide Security to Crypto Investors

Following the recent wave of governmental Bitcoin interest and adoption, the Texas Department of Banking has just announced that state-chartered banks will be allowed to offer custodial services for digital assets. This is incredible for investors, as they will be able to own digital assets without facing many of the risks that come with virtual investments. 

Tweet: https://twitter.com/GregAbbott_TX/status/1400971477051133956 

In the Texas Department of Banking Industry notice, officials outlined the specifics that should be considered by clients and banks when deciding to go into business together, as well as the need for a safe place to keep digital assets. The report goes on to express how crypto holdings will fall into current Texas laws, and how seriously security must be taken. 

The banking system is an instrumental piece of the world financial economy, providing various services to both individuals and institutions. Hacks and scams are some of the major risks that come with holding crypto, and security of funds is the main aspect provided by banks. The integration of the two is sure to attract many new crypto investors, especially as the bank will most likely have insurance protecting any virtual currencies they hold for clients.

Additionally, by allowing banks to hold crypto for clients, the federal government will be able to have greater insight into where assets go and how they are used. While this crypto adoption may take away an element of anonymity provided by decentralization, it will make the asset class more mainstream. 

It would be remiss to not mention the irony of banks holding custody of cryptocurrencies for clients, as BTC was really created to act as a new financial system. BTC was created during the financial crisis of 2008, with the idea that central authority and banks were failing the people. In Bitcoin’s genesis block, the creator, Satoshi Nakamoto coded a massage to forever last in his blockchain:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

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Texans Can Easily Escape Inflation

Rising consumer prices and high inflation are two major problems facing the United States as the economy recovers from the pandemic. Supply chain disruptions and government recovery packages continue to have an impact, with prices rising faster than seen since 2008

As inflation poses the risk to diminish cash savings, investors are beginning to look towards ways to hedge against the uncertainty. Historically, gold has been the main asset used to get out of fiat currencies, but now digital assets present a new opportunity. By passing this new legislation, Texas is giving its citizens a huge opportunity to use cryptocurrencies to avoid inflation and keep their coins secure in banks. 

Historically, banking and cryptocurrencies have been opponents, but now it seems that the two have the opportunity to work together. How will banks providing custodial services for crypto change the risks associated with digital assets? Let us know in the comments.