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Louisiana Bill Allows Institutions to Custody Bitcoin on Behalf of Customers

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The governor of Louisiana recently signed a bill allowing financial institutions in Louisiana to have custody of Bitcoin and digital assets on behalf of their customers. Dennis Porter tweeted the finalized bill on June 21st, 2022.

Louisiana's new law now allows banks and financial institutions within the state to provide “virtual currency” custodial services on the condition that each institution has adequate protocols set in place to manage risk and comply with regulations.

In addition to these guidelines, banks and financial firms must also meet the following requirements:

  1. Provide controls that measure and monitor relevant risks.
  2. Confirm they have adequate insurance coverage.
  3. Maintain service provider oversight.

The bill will allow banks to provide Bitcoin and cryptocurrency custodial services at a non-fiduciary and fiduciary capacity. 

Non-fiduciary custodial service providers will take possession of the customer's assets for safekeeping until funds are withdrawn onto external wallets by the customers. 

If the bank is operating as a fiduciary custodial service provider, the bank will be given full control of their customer's funds where banks shall have authority to manage the Bitcoin and cryptocurrency assets in a similar fashion to other traditional assets.

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