LINCOLN — Nebraska is getting in on the cryptocurrency craze.
Gov. Pete Ricketts signed LB 649, or the Nebraska Financial Innovation Act, into law on Tuesday. The law, authored by Sen. Mike Flood of Norfolk, establishes digital asset banks as a new kind of financial institution.
“It is really meant to attract those in the space that want to run towards regulation, that want to be legitimate, that want to provide the safety and soundness that we’ve come to expect from financial institutions,” Flood said.
Right now, most people store cryptocurrency via the app used to buy the currency, or on an external hard drive. You use a private key to access the account, which is where risk comes in.
“If you were to lose your key to get into that, you can lose your entire asset," Flood said. "You’re also banking (on the security of) a different server - one that you don’t know is regulated or not.”
The bill made it through the legislature’s Banking, Finance and Insurance Committee, chaired by Sen. Matt Williams. He says the committee made sure significant consumer protections were included in the bill, like warning customers of risk.
“These institutions will not have FDIC coverage, they don’t make traditional loans and deposits, but they do facilitate transactions, they facilitate business using digital assets,” Williams said.
There’s already interest from existing companies and entrepreneurs. Flood worked with Telcoin when drafting the bill. Now, the company will locate in Flood’s hometown and bring about 10 high-paying jobs with it.
“They thought, this is a great way to work with a state that’s gonna be safe, that’s gonna regulate these entities in the right way and provide that extra layer of protection to consumers,” Flood said.
Nebraska is the second state, after Wyoming, to allow for digital asset banks to receive charters.
Mike Flood is the owner and founder of Flood Communications, which operates News Channel Nebraska and its affiliates.