AI-assisted research summary: Financial institutions and trust companies may provide virtual currency custody services if they have adequate risk controls, follow applicable laws, and meet the provision’s specific custody requirements.
§1402. Provision of virtual currency custody services A. A financial institution or trust company may provide its customers with virtual currency custody services if the financial institution or trust company has adequate protocols in place to effectively manage risks and comply with applicable laws. A financial institution or trust company may provide virtual currency custody services through third-party service providers. Prior to a financial institution or trust company offering virtual currency custody services, the financial institution or trust company shall carefully examine the risks involved in offering such services through a methodical self-assessment process. If a financial institution or trust company decides to offer such services, the financial institution or trust company shall do all of the following: (1) Implement effective risk management systems and controls to measure, monitor, and control relevant risks associated with custody of digital assets such as virtual currency. (2) Confirm that it has adequate insurance coverage for such services. (3) Maintain a service provider oversight program to address risks to service provider relationships as a result of engaging in virtual currency custody services. B.(1) Consistent with authority provided through the entity's charter, a financial institution or trust company may provide virtual currency custody services in either a nonfiduciary or fiduciary capacity. (2) In providing such services in a nonfiduciary capacity, the financial institution or trust company shall take possession of the customer's asset for safekeeping while legal title remains with the customer. The customer shall retain direct control over the keys associated with his virtual currency. (3) In providing such services in a fiduciary capacity, a financial institution or trust company is required to possess trust powers as provided for in R.S. 6:241, 575, and 731. Acting in a fiduciary capacity, the financial institution or trust company shall require customers to transfer their virtual currencies to the control of the financial institution or trust company by creating new private keys to be held by the financial institution or trust company. In its fiduciary capacity, a financial institution or trust company shall have authority to manage virtual currency assets as it would any other type of asset held in such capacity. Acts 2022, No. 509, §1.