Minnesota opens the door to bank-led crypto custody from August 1 – Details
Under recently signed legislation, Minnesota banks may soon function as crypto safes.
Minnesota has enacted legislation permitting banks and credit unions to provide and carry out specific digital currency custody services.
As the state continues to look into the legal limits of various crypto-related services, Governor Tim Walz signed HF 3709 into law. Introduced to the governor on the 12th of May 2026, the bill is scheduled to go into effect on the 1st of August 2026.
Minnesota’s new crypto law
Banks and credit unions are now permitted by law to hold cryptocurrency assets for their clients, just as they do with cash or important documents.
Additionally, they can control the private keys, which are the secret passwords required to access cryptocurrency wallets. However, they have to give the state commissioner at least sixty days’ notice before beginning these services.
The law further noted,
A credit union that engages in virtual-currency custody services must conduct the activity in a safe and sound manner and must maintain written policies and procedures governing risk management, internal controls, cybersecurity, business continuity, and compliance.
Importantly, customer cryptocurrency must be kept apart from the bank’s own assets. This means that even in the event of a bank crisis, cryptocurrency should still legally belong to the customer.
Oversight remains
Banks and credit unions can choose to work with outside crypto custodians.
However, they will still remain subject to regulatory oversight. Regulators will conduct routine inspections and supervise these crypto custody operations.
Remarking on the same, back in March, Representative Bernie Perryman said,
House File 3709 is about ensuring that Minnesota-based financial institutions are allowed to evolve alongside their customers and members rather than forcing Minnesotans to rely on unregulated, out-of-state or offshore providers for services that are already in use today.
It goes without saying that the crypto custody law might affect the operations of every financial institution in the state.
State government data showed that, as of May 2025, Minnesota had 82 member-owned credit unions under the Minnesota Credit Union Network. It also had 240 commercially insured banks holding about $128 billion in assets.
Minnesota joins pro-crypto states, but…
With similar laws already in place in New York, Wyoming, and Virginia, Minnesota is joining an increasing number of states that have allowed specific banks to offer crypto custody services.
This new law comes as the state is cracking down on all cryptocurrency ATMs and kiosks. In a separate signing, Walz has also approved SF 3868, a bipartisan bill that would ban ATMs throughout the state as of the 1st of August.
Final Summary
- Governor Tim Walz signed HF 3709 into law, which is scheduled to go into effect on the 1st of August 2026.
- Minnesota now follows New York, Wyoming, and Virginia in enacting similar legislation.
