                                 CODE OF VIRGINIA

VIRTUAL CURRENCY CUSTODY SERVICES (§ 6.2-1302.1)

A. As used in this section:
			&#8220;Custody services&#8221; means the role of a credit union in the
safekeeping and custody of various customer assets.
			&#8220;Virtual currency&#8221; has the same meaning as provided in &#xA7;
6.2-818.1.

B. A credit union may provide its customers with virtual currency custody
services so long as 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. If
a credit union engages in virtual currency custody services, the credit union
shall:

   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; and

   3. Maintain a service provider oversight program, to the extent that the
   credit union engages with a service provider to provide virtual currency
   custody services, to address risks to service provider relationships as a
   result of engaging in virtual currency custody services.

C. A credit union may provide virtual currency custody services in a fiduciary
or nonfiduciary capacity. In providing such services in a nonfiduciary capacity,
the credit union shall act as a bailee, taking possession of the
customer&#8217;s asset for safekeeping while legal title remains with the
customer, such that the customer retains direct control over the keys associated
with his virtual currency. To provide such services in a fiduciary capacity, the
credit union shall obtain approval from the Commission as required by subsection
D. In providing virtual currency custody services in a fiduciary capacity, the
credit union shall receive control of the customer&#8217;s virtual currency, and
new private keys shall be created to be held by the credit union. If approved by
the Commission to provide virtual currency custody services in a fiduciary
capacity, a credit union shall have authority to manage virtual currency assets
as it would any other type of asset held in such capacity.

D. No credit union shall provide virtual currency custody services in a
fiduciary capacity without first obtaining authorization to do so from the
Commission. The Commission shall not grant such authority until it finds that
the credit union has satisfied the following requirements:

   1. The credit union&#8217;s capital structure is sufficiently strong to
   support the undertaking to provide virtual currency custody services;

   2. The personnel who will direct the proposed virtual currency custody
   services have adequate experience, training, and sufficient resources to
   ensure compliance with laws and regulations and to protect the operations of
   the credit union; and

   3. Granting such authority to the credit union is in the public interest.

E. The Commission may impose conditions on the authority granted to any credit
union pursuant to subsection D and may suspend or revoke such authority if it
finds that the credit union has failed to comply with any laws or regulations
applicable to virtual currency custody services or any existing conditions
imposed by the Commission or if the services are otherwise being provided in an
unsafe or unsound manner.

HISTORY: 2023, c. 303.