Clarify and override stricter state laws on Custody

[1blockologist]

Storing digital assets on behalf of clients doesn't have clarity.

What level of AML/KYC is required, should the state create the cybersecurity requirements as opposed to SROs and industry evolution, what level of reserve balances and transparency is mandated?

In 2014, New York State created the "Bitlicense" which introduced higher standards and costs than their banking license, while exempting banking license holders from needing the Bitlicense. The federal government can seek to avoid discrepancies like this.

As such, many service providers do not cater to New York State (although new entrants to this asset class may be holders of banking licenses as this law clarifies other aspects and grows the market.)

In 2018, Wyoming exempted token issuers (and service providers?) from their Money Services Business laws, which include AML/KYC. Current forms of distributed ledgers provide enough transparency into the flow of funds to remove the compliance burden from the issuers and service providers.

The Federal law should factor these efforts in, lowering the costs of transactions, and also removing the burden of disparate state laws.