Minnesota has approved a law allowing banks and credit unions to offer crypto custody services. The measure lets state-regulated financial institutions hold customer digital assets under rules focused on notice, internal controls, security, and asset segregation requirements for safer oversight.
HF 3709 was signed by Governor Tim Walz on Friday. According to the Minnesota Legislature website, it permits certain virtual-currency custody services to be offered and performed.
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Crypto Custody Rules Set Compliance Standards
The law takes effect on Aug. 1, 2026. It establishes guidelines for banks and credit unions that decide to participate in crypto custody.
The institutions should have a written policy in place prior to introducing the service. Those policies should include risk management, internal controls, security, and any other compliance policies.
They also have to inform the Minnesota Commissioner of Commerce in writing. The notice shall be provided at least 60 days prior to the commencement of crypto custody services.
The crypto custody notice should include information about their risk management framework for state review. Banks and credit unions are also required to keep their assets apart from those of their clients.
Rep. Bernie Perryman, a main author of HF 3709, supported the bill in a March press release. Minnesota financial institutions should have the opportunity to move with customers and members, he said.
Residents should not be forced to choose an out-of-state or offshore provider that may be unregulated, Perryman said. He noted that his comments were related to crypto custody and access via locally regulated custodians.
Minnesota Backs Crypto Oversight While Banning ATMs
The Minnesota Credit Union Network also welcomed the law on Friday. It stated the measure provides a secure solution for crypto management for Minnesotans.
Oversight can enhance protection from fraud, hacks, and loss, the group said. Minnesota joins New York, Wyoming, and Virginia as other states with similar rules.
The state has taken a stricter approach to crypto ATMs. Minnesota passed SF 3868 earlier this month, which prohibits the use of crypto ATMs or kiosks anywhere in the state.
As of Aug. 1, no new crypto ATMs will be allowed to be installed. Operating kiosks will not be allowed to stay, and owners will need to take them down by Dec. 31.
Last month, Canada said it intends to ban crypto ATMs. It cited fraud and money laundering risks in its spring economic update.
Bitcoin ATM operator Bitcoin Depot announced on Monday it had filed for Chapter 11 bankruptcy. It also announced it would wind down its business.
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