Nebraska approves first digital asset bank in US

Nebraska has become the first state in the nation to allow a digital bank that can “mint” stablecoins.

Gov. Jim Pillen late Wednesday said the Nebraska Department of Banking and Finance had issued a charter to Telcoin Digital Asset Bank to operate a digital asset depository institution, which he said is the first one in the U.S.

“With this first-in-the-nation approach, Nebraska is leading a new era of digital payments by issuing a charter to a digital asset bank that can 'mint' stablecoins,” Pillen said in a news release. “Our message to the industry is simple: Nebraska is open for your business.”

The digital asset bank structure was made possible by a bill passed by the Nebraska Legislature in 2021. That bill was introduced by now-1st District Rep. Mike Flood when he was a state senator.

Jane Liu, an assistant professor of economics at the University of Nebraska Omaha who does research on cryptocurrencies, said the announcement puts Nebraska out front in the industry and could help the state become a hub for digital banks, similar to how South Dakota became a hub for the credit card industry in the 1980s.

"This could be a niche for Nebraska, you know, because companies, they like an environment that is predictable, that has a legal framework that they can rely on, so it will attract fintech companies, all these talents to the state," Liu said. "And I think it's a great opportunity for Nebraska, and hopefully we can build a clustered industry."

Stablecoins, a type of cryptocurrency meant to maintain a steady value and backed by U.S. bonds or bank deposits, can eventually offer people another form of payment they can use for goods and services, said Kelly Lammers, director of the Department of Banking and Finance.

“This special-purpose bank is designed under Nebraska law to ensure the payment is always good,” Lammers said in the release.

Stablecoins are growing rapidly in popularity. A Brookings Institution report showed that monthly stablecoin transactions topped $1 trillion for the first time in September. That’s up from less than $100 billion at the end of 2020. And Bloomberg reported that stablecoin use has grown 70% just since July, when President Donald Trump signed the GENIUS Act into law, providing a regulatory framework for stablecoins.

Liu said stablecoins now make up about 30% of all cryptocurrency use, which she called "very significant."

Telcoin, a multinational fintech company, announced last month that it had raised $25 million from investors to capitalize the Nebraska bank operation.

The company said in the news release that Telcoin Digital Asset Bank will be the first true blockchain bank in the U.S., allowing it to securely connect bank accounts to stablecoins for use as “digital cash.” It plans to issue its own stablecoin, called “eUSD.”

“Our charter makes history, and not just for Telcoin, but for the entire U.S. banking system,” Paul Neuner, Telcoin’s founder and CEO, said in a separate news release. “We’re proving that a bank can issue on-chain digital cash responsibly and operate in full alignment with U.S. regulators. EUSD brings the speed, transparency, and affordability of blockchain into everyday finance in a way that anyone can use.”