Gov. Jim Pillen and the Nebraska Department of Banking and Finance gave final approval Nov. 12 to the final charter for the launch of Telcoin Digital Asset Bank in Norfolk. As a result, Telcoin will manage the first regulated digital asset depository in the United States, with leadership expecting operations to begin in December. 

 

State experts said the burgeoning market of digital assets means more economic opportunities for entrepreneurs and developers of fintech and crypto in Nebraska. It also means more considerations for businesses, banks and policymakers to look into for protecting customers. 

 

The charter approval follows the recent passing of state and federal policies regarding digital assets. The Nebraska Financial Innovation Act (NFIA) passed into law in Nebraska in 2021 — laying the groundwork for the creation and regulation of digital asset depositories. 

 

Congress passed the GENIUS Act earlier this year to regulate and provide guidelines for stablecoins at a national level. 

 

“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 press release. “Our message to the industry is simple: Nebraska is open for your business.”

A global presence in Norfolk

Founded in 2017, Telcoin is a global fintech company serving 171 countries with its crypto-focused products and services. Telcoin President of Banking Operations Patrick Gerhart said the company started in Singapore with a digital wallet and product similar to other cryptocurrencies.

 

As the U.S. market and government has shown an increased interest in the digital asset space in recent years, Gerhart said Telcoin is in the process of “domiciling” and basing itself more in the United States. 

 

Gerhart said Telcoin Founder and CEO Paul Neuner originally considered building digital asset depository operations in Wyoming due to the state's own early legislation meant to bring some regulation to the crypto scene. 

 

But Gerhart said Neuner discussed his ambitions with his college friend Mike Flood, the former Nebraska state senator and current U.S. 1st District congressman. As a result, Neuner collaborated with and testified before the Legislature to form regulatory legislation that would, in turn, encourage businesses such as Telcoin to come to Nebraska. This legislation would become the NFIA, Gerhart said. 

 

In the press release about the charter approval, Telcoin leadership said it wants to bridge the gap between traditional banking methods and new technologies in the digital asset space. To try to bring in everyday consumers as adopters of digital assets, Gerhart said, state and federal regulation — as well as industry support — are key.

 

“For the general public to get into digital assets, specifically stablecoins, it's my view that you need something like the U.S. banking industry on board and backing it,” Gerhart said. “When you have that, you have a trusted institution that everyday Americans believe in — that they don't feel like they're going to get swindled by.”

 

Telcoin has expanded its offerings to include its own stablecoin called eUSD. Unlike other cryptocurrencies that can wildly fluctuate in value based on supply and demand, stablecoins are designed to remain at a steady value due to a backing by other assets. 

 

According to Telcoin, eUSD is bank-issued and “fully backed by U.S. dollar deposits and short-term Treasuries held in regulated reserves.”

 

After years of state banking officials trying to figure out how to implement NFIA — as well as months of deliberation with Telcoin to work out concerns and questions — state officials accepted Telcoin’s application for its digital asset depository in September 2024. The approval process came to an end last week. 

 

While services will be more centralized online, Gerhart said Telcoin is basing its digital asset bank and office in Norfolk due to a variety of reasons. These include the city’s demonstrated support to bring the company to its community as well as personal ties to the city. Gerhart said both he and Flood are from the area.

Considerations and opportunities

Jane Liu, assistant professor of economics at the University of Nebraska at Omaha, said Nebraska presents a more welcoming environment for policymaking when it comes to digital assets. In comparison to “very large and historically established” ecosystems in New York and California, “Nebraska operates within a smaller, more closely connected ecosystem,” she said.

 

Using the NFIA as an example, Liu said, stakeholders in government, industry and academia can communicate and work together more effectively in Nebraska. 

 

Still, public education and government input take time on new technologies — even if founders and early supporters push for quick adoption, Liu said. In the case of cryptocurrencies, she added, additional roadblocks appear with the realities of crypto scams and other illegal uses of digital assets. 

 

“We want to balance financial innovation and consumer protection,” Liu said. 

 

Richard Baier, president and CEO of the Nebraska Bankers Association, said traditional banking institutions are still hesitant to fully dive into the market of cryptocurrencies and stablecoins. 

 

Although the passing of the NFIA and GENIUS Act provide some guardrails to prioritize the protection of consumers, he said the industry still faces unknowns that stakeholders want to see play out. For example, the CLARITY Act at the federal level is still waiting for approval and implementation. 

 

On top of seeing how the industry will continue to adjust to new laws and regulations, Baier said banks are also only seeing a “niche” market interest for digital assets — specifically among “younger, more technologically focused consumers.”

 

“As you can imagine, we don't see bank customers coming in everyday saying, ‘I would love to buy this stablecoin’ — that's just not something that happens,” Baier said. 

 

While progressing with “baby steps,” the establishment of rules and guidelines and the participation of traditional institutions will incentivise a wider range of consumers to consider digital asset uses, Liu said. The uses for stablecoins Liu pointed to include faster and cheaper transactions across country borders, as well as the ability for rural communities to conduct payment needs — even if they are not located near a bank. 

 

Baier said he sees business opportunities for new vendors to help traditional institutions and community banks navigate the ever-evolving world of digital assets. 

 

“Our banks have been strong over the years in embracing technology,” Baier said. “Whether that was online banking or what started with ATMs and then debit cards and then remote deposit capture and online bill pay.”

What this means for Nebraska

With the passing of NFIA and the presence of Telcoin Digital Asset Bank, Liu said there is a signal to industry leaders that Nebraska is a place to do business — leading to a partial solution to brain drain. 

 

“If we create an environment that is friendly for these businesses, we can actually attract high-skilled workers, tech companies, engineers, entrepreneurs — we can attract all these talents back to the state,” Liu said. 

 

Gerhart said Telcoin is looking to hire locally, as well as build relationships within the state for fostering digital asset adoption. 

 

Gerhart, who praised state leadership and identity-building efforts such as the Flyover Fintech conference, said Nebraska is positioning itself as a leader in the formation of the U.S. crypto ecosystem and its legal framework. 

 

“It takes time,” he said, “but I think the interest is there, the infrastructure's here, and more importantly, the people are here to help make that happen.”