Nebraska May Let State Banks Offer Cryptocurrency Services


OMAHA, Neb. (AP) – Banks in Nebraska keen to cash in on the cryptocurrency tech craze could start offering services to customers who own Bitcoin and other digital assets as part of a bill backed by state lawmakers on Monday.

Senators advanced the measure, 39-1, by the first of three votes required in the Legislature.

The move would make Nebraska the second state to create a formal charter for “cryptobanks,” allowing them to facilitate transactions. The first state was Wyoming, which chartered its first institution in September.

Cryptocurrencies are a form of online money that is stored and tracked using a decentralized network of independent computers, making transactions extremely secure and easy to verify. Unlike paper money, they are not issued by any central government, which appeals to some users who are worried about inflation.

The technology has grown in popularity, resulting in astronomical gains for some investors, although critics say cryptocurrencies are extremely risky and unstable, and most if not all are likely to fail.

Senator Mike Flood, of Norfolk, said he introduced the bill after speaking with an entrepreneur friend who recently decided to move to a cryptocurrency company in Wyoming. Flood said Nebraska has a chance of becoming an early adopter of cryptocurrencies with this measure, which could help bring well-paying technology and fund jobs to the state.

“This is a unique opportunity not only for my district, but also for the state of Nebraska,” said Flood.

Some financial services companies, including PayPal, have started offering services that allow customers to buy and sell cryptocurrency. The Nebraska bill would allow state chartered banks to offer similar services by creating a separate division within their businesses, said Sen. Matt Williams, chairman of the Banking, Finance and Insurance Committee of the Legislative Assembly. Unlike cash deposits in banks, cryptocurrencies are not federally insured.

“It’s a new world, and we’re exploring this world with this legislation,” said Williams of Gothenburg.

But some lawmakers have questioned whether it makes sense for the state to embrace cryptocurrencies and said they still don’t know everything the measure will do.

“This bill is far from in a form in which it could be passed,” said Senator Steve Erdman of Bayard.

Senator Adam Morfeld, of Lincoln, said he supported the general idea but opposed parts of the bill that would exclude credit unions from participating. Their main competitor, the banking industry, worked extensively with lawmakers on the bill before leaving committee.

“I don’t know what the rationale is apart from protectionism,” Morfeld said.


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