Nebraska, a state in the midwestern region of the United States, signed a law on May 26 to authorise state-licensed banks to hold cryptocurrencies, news agency AP reported.

Nebraska becomes the second American state after Wyoming to do so.

The measure would make Nebraska the second state to create a formal charter for "cryptobanks," allowing them to help facilitate transactions. The first state was Wyoming, which chartered its first institution in September, the report mentioned.

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The legislation aims to turn Nebraska into a major hub for digital asset companies and those interested in innovative new financial products and services based on blockchain technology. Interestingly, the banking industry worked extensively with lawmakers on the bill before it advanced out of committee.

In an effort to bring the state of Nebraska to the forefront of national financial regulatory innovation, Governor Pete Ricketts signed the Legislative Bill 649, also known as the Nebraska Financial Innovation Act.

Telcoin, a blockchain-based fintech major aligned with the telecom and mobile money industries globally, drafted the legislation as it seeks to bring its own digital asset-backed financial services to the US consumers in a compliance-first fashion.

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Introduced by Senator Mike Flood, the legislation creates a new state banking charter for digital asset depository institutions. The charter is the first of its kind to be shaped around consumers and connect them to decentralised finance (DeFi) in a safe and regulated manner.

"At its heart, this new charter represents an alternative type of bank that does not have the right to loan your money to somebody else," says Telcoin CEO Paul Neuner. "Institutions under this new charter will use blockchain technology to empower users to self-custody digital assets and put their money to work for their own benefit," he added.

Some analysts praised the initiative, which they said is apt for exploring a new world. However, some lawmakers questioned whether it was smart for the state to embrace cryptocurrencies and said they were still unclear about everything the measure would do. Some others supported the general idea but opposed parts of the bill that would exclude credit unions from participating.

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Incidentally, Dr Demetrio Aguila III, a practicing surgeon at Healing Hands of Nebraska in Norfolk, started accepting cryptocurrency from May 7 to offer people more payment options. Aguila will transfer that amount using a platform like CoinBase, according to news channel Nebraska.

(Edited by : Jomy)

First Published:May 27, 2021 3:41 PM IST