Louisiana Bill to Allow Banks to Have Custody of Bitcoin and Digital Assets

Key Takeaways:

  • The Louisiana bill would allow Banks to have custody of Bitcoin and digital assets. Louisiana passed Chapter 22 of Title 6 of the Louisiana Revised Statutes. 
  • In 2020, it became the second state, after New York, to pass the Virtual Currency Business Act. 
  • To operate in the state, crypto firms must get a license under the Act.

The most extensive talk of the town right now is about the State of  Louisiana bill in the lower house that has been passed that apparently will allow Banks to have custody of Bitcoin and digital assets. Louisiana passed Chapter 22 of Title 6 of the Louisiana Revised Statutes, which deals with digital assets. “Custodial services” refer to the safekeeping and administration of customer currency and digital assets as a custodian through the exercise of fiduciary and trust powers under this section.

This year in March  Louisiana state representative proposed legislation to legalize cryptocurrency donations to political campaigns. If this bill will become a law or be approved then the measure was set to establish a legal framework for the acceptance and use of bitcoin contributions to political entities.

It aimed at altering and reenacting existing laws governing such donations, as well as establishing procedures for giving, using, reporting, and accepting cryptocurrency donations. This is not the first time a cryptocurrency-related measure was introduced in Congress. In 2020, it became the second state, after New York, to pass the Virtual Currency Business Act. To operate in the state, crypto firms must get a license under the Act.

What is the Concept of Crypto Custody?

Crypto custody basically is the procedure of protecting digital assets from theft. In a nutshell, custodians which is the third party are the ones that manage our crypto assets.  Custodians have been operating since the 1960s and are one of the traditional banking system’s foundations.

This is the process of ensuring you are in control of the funds stored in your cryptocurrency wallet. By law, all custodians in traditional banking must be financial entities. As for cryptocurrency holders, they can even choose to become their own custodians. 

As a user, you can compare it to holding a checking account with a bank. You must go through know-your-customer and anti-money laundering procedures when you register to open an account. When you store bitcoin with a third-party custodian, you will be expected to do the same checks to ensure that your cryptocurrency was not obtained illegally.

State Representative Introduces Legislation to Allow Cryptocurrency Donations to Political Campaigns

In Louisiana, lawmakers are proposing a law that would allow cryptocurrency donations to political campaigns. Sponsored by Republican Party Representative Mark Wright, the initiative sought to establish a legal framework for bitcoin donations to political parties and political leaders.

A candidate can accept cryptocurrencies as campaign contributions under House Bill No. 170, which updates and reenacts existing legislation. The report asks that the House develop a mechanism for collecting such gifts, including contributions, utilization, reporting, and other concerns.

The proposed legislation starts with a definition of cryptocurrency. It is defined, in part, as a currency that is not issued by any central authority, acts as a medium of exchange, and uses encryption technology to control units of currency generation, verify fund transfers, and prevent counterfeiting.”

Candidates, officeholders, and political groups are encouraged to accept bitcoin payments, but they must be converted into fiat currency first. In April of last year, the Louisiana legislature approved a resolution to honor Satoshi Nakamoto and bitcoin for their “contribution to economic security.”

House resolution by Representative Wright urges “state and local government officials to investigate methods that can help them maximize the benefits of expanding the use of this revolutionary technology,” citing bitcoin’s “emergence as the first decentralized trillion-dollar asset.” Despite state legislators’ interest in bitcoin adoption in recent years, US officials are pushing for more regulation of the asset class.

Baisakhi Mishra
Baisakhi Mishra

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