Digital asset depository bill approved

A bill establishing a state-level regulatory system for digital assets — including cryptocurrency such as Bitcoin — passed May 20.

LB649, introduced by Norfolk Sen. Michael Flood, allows creation of digital asset depository institutions in Nebraska.

The bill provides two pathways for managing digital currency: a state-chartered bank may create a digital asset division or a digital asset depository may be created under a new charter. Both are regulated by the state Department of Banking and Finance.

Among other provisions, LB649 also:
• establishes procedures for incorporation, operation, liquidation and dissolution of digital asset depository institutions;
• prohibits digital depository institutions from taking cash deposits or lending cash;
• requires a digital depository’s headquarters and office of the chief executive officer to be established in Nebraska;
• allows digital depositories to be held by a bank holding company and allows existing bank investment in such a depository;
• requires notice to customers that accounts are not insured by the Federal Deposit Insurance Corporation if applicable;
• requires a surety bond or pledged investments and specified private insurance;
• authorizes digital depositories to obtain federal deposit insurance if available;
• establishes a minimum capital requirement of $10 million;
• allows a digital asset depository to use the term “bank” in its name only if it is clear that the entity is managing digital assets;
• allows digital depositories to apply for membership in the Federal Reserve Bank system; and
• authorizes the director of the Department of Banking and Finance and the governor to set the assessment of digital depositories to cover administration costs.

Lawmakers passed LB649 on a 46-2 vote.