Digital asset depository bill approved

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

Sen. Michael Flood
Sen. Michael Flood

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.

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