Bitcoin with the Texas flag.The Texas Department of Banking has issued a notice stating that state-licensed banks may offer bitcoin escrow solutions to customers as long as the bank has specific protocols in place to manage risk and comply with the law. The authority to provide these services already existed under the Texas Financial Code. The notice states that banks can choose the specific escrow and storage solutions they want to offer their customers, depending on what best fits the bank's experience, risk appetite and business model. When it comes to escrow solutions, the notice mentions two example scenarios. “For example, the bank may choose to allow the customer to retain direct control over their own virtual currency and only store copies of the customer's private keys associated with that currency virtual,” says the notice. “Alternatively, the bank can have the customer transfer their virtual currency directly into bank control, creating new private keys which are then held by the bank on behalf of the customer.” In both scenarios, however, the customer would lose the Full control of your funds. In the first example, while the customer would know which private keys spend their funds, a copy of their keys would be owned by the bank – which would technically be able to spend the BTCs without the user's consent. And in the second case, the customer would not even know which private keys control their funds. In addition, the notice mentions that a state-licensed bank seeking to provide these bitcoin escrow services can do so in a fiduciary or non-fiduciary capacity. In the first ability, the bank would have the authority to manage the customer's bitcoin like any other asset held with such power. And, in a non-fiduciary capacity, the bank would only take possession of the client's bitcoin – which would then receive a legal title to those funds. Although it may seem natural for clients to lose sovereignty over their funds by choosing to delegate part of their custody responsibilities bitcoin to third parties, such as state-licensed banks, this need not be the case. With multiple signature custody, for example, banks could keep the minority of the configuration's private keys only for backup or security enhancement purposes, avoiding to spend the client's funds. In that case, the bank would be providing a valuable service to the customer, while the customer would still be completely sovereign over their bitcoin.See also: The week Bitcoin became official currency, see a summary of what happened
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