DLG Assists Telcoin to Become Nebraska’s First Digital Asset Depository Institution

On February 3, 2025, the Nebraska Department of Banking and Finance issued an order giving conditional approval on Telcoin, Inc’s application to operate a digital asset depository institution in the state. Dvorak Law Group attorneys Mark Quandahl, Tom Langan, Daniel Florance, and Nicholas Sullivan  worked tirelessly on the application. Congratulations on your accomplishment!

—————————————————————————————————————————————————————————

Omaha, NE – Dvorak Law Group, headquartered in Omaha, Nebraska, represents Telcoin, Inc. in its pioneering application for a digital asset depository charter under the Nebraska Financial Innovation Act. This significant move marked a milestone in the integration of digital assets within the traditional financial regulatory framework.

Telcoin’s Vision for Digital Asset Innovation
Telcoin, a leading blockchain-based financial technology company, aims to leverage this charter to establish a secure and regulated environment for digital asset transactions. The application, filed with the Nebraska Department of Banking and Finance, seeks to create a depository institution that can offer a range of digital asset services, including custody, exchange, and transaction facilitation.

The Role of Dvorak Law Group
Dvorak Law Group has been instrumental in guiding Telcoin through the complex financial institution regulatory landscape. The firm’s expertise in financial and securities law has been crucial in preparing a comprehensive application that meets the stringent requirements set forth by the Nebraska Financial Innovation Act. This act, designed to foster innovation in the financial sector, provides a legal framework for the establishment and operation of digital asset depositories in Nebraska.

Dvorak Law Group provided representation to Telcoin and statutory drafting assistance for the Nebraska Financial Innovation and its primary proponent in the Nebraska Legislature: then Nebraska State Senator Mike Flood. Mike Flood is now a congressman representing the First District of Nebraska in the United States Congress. Congressman Mike Flood, representing Nebraska’s 1st District, has outlined several key priorities as a member of the Financial Services Committee with a continued focus on financial innovation:

1. Digital Asset Regulation: Flood is committed to advancing legislation that provides clear regulatory frameworks for digital assets, ensuring innovation while protecting consumers.
2. Support for Small Businesses: He aims to increase access to capital for small businesses, recognizing their critical role in the economy.
3. Housing and Insurance: Flood serves on the Housing and Insurance Subcommittee, focusing on policies that enhance housing affordability and improve the insurance market.
4. Financial Technology and Inclusion: As a member of the Digital Assets, Financial Technology, and Inclusion Subcommittee, he works on initiatives to promote financial inclusion through technology.
5. Economic Growth and Stability: Flood is dedicated to policies that foster economic growth and stability, ensuring the financial well-being of Americans as the financial system evolves.
These priorities reflect his commitment to supporting Nebraska’s banking and insurance sectors and addressing the broader needs of the U.S. financial system.

The Nebraska Financial Innovation Act
The Nebraska Financial Innovation Act, signed into law on May 25, 2021, establishes a framework for the creation and regulation of digital asset depositories in Nebraska[1]. Here are the law’s key points:
1. Digital Asset Depositories: The Act allows for the formation of digital asset depositories, which can be either a separate department within an existing financial institution or a newly chartered digital asset bank[1].
2. Services Provided: These depositories can offer various services related to digital assets, including custody services for cryptocurrencies, payment services, and non-lending digital asset banking[1]. They can also issue and manage stablecoins, which are cryptocurrencies backed by reserve assets like the U.S. dollar[1].
3. Regulatory Oversight: The Nebraska Department of Banking and Finance oversees the application and operation of these depositories, ensuring they comply with state and federal laws[2].
4. Consumer Protection: The Act includes provisions to protect consumers, such as requiring disclosures about the risks associated with digital assets and ensuring that depositories maintain sufficient liquid assets[2].

This legislation positions Nebraska as a leader in financial innovation, particularly in the rapidly evolving digital asset sector.

The Application Process
The application process involved a detailed review by the Nebraska Department of Banking and Finance. A public hearing on the application was held on December 5, 2024 in Lincoln. Telcoin was represented at the hearing by DLG attorneys Nicholas F. Sullivan, Daniel R. Florance, and Mark C. Quandahl. During this hearing, stakeholders, including Telcoin Founder Paul Neuner, General Counsel Tim Mahota and President Patrick Gerhart, had the opportunity to present Telcoin’s vision for a digital asset depository charter. There were no objections to the proposed charter.

Implications for the Financial Industry
Telcoin’s digital asset depository charter will set a precedent for other fintech companies looking to operate within a regulated environment. This move is expected to enhance consumer confidence in digital asset transactions and promote broader adoption of blockchain technology in the financial sector.