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Financial Services Law Insights and Observations

Virginia credit unions may offer virtual currency custody

State Issues State Legislation Virginia Credit Union Digital Assets Virtual Currency

State Issues

On March 23, the Virginia governor signed HB 1727, which amends the Virginia code to allow credit unions operating in the commonwealth to engage in virtual currency custody services, provided the credit union “has adequate protocols in place to effectively manage risks and comply with applicable laws and, prior to offering virtual currency custody services, the credit union has carefully examined the risks in offering such services through a methodical self-assessment process.” The amendments stipulate that in order to engage in such services, a credit union must implement effective risk management systems and controls, confirm adequate insurance coverage, and maintain a service provider oversight program.

The amendments further provide that a credit union may offer such services in a fiduciary or nonfiduciary capacity; however, in order to provide virtual currency custody services in a fiduciary capacity, the credit union must first obtain approval from the State Corporation Commission. Commission approval is contingent upon a credit union having sufficient capital structure to support providing such services, credit union personnel being adequately trained to ensure compliance with governing laws and regulations, and that granting such authority is in the public interest. The amendments are effective July 1.