Minnesota Enacts Crypto Custody Law for State-Chartered Banks and Credit Unions

(AsiaGameHub) –   Minnesota has passed a cryptocurrency custody law allowing state-chartered banks and credit unions to hold digital assets for customers under state supervision.

Good to Know

• HF 3709 will become effective on August 1, 2026.
• Banks and credit unions must notify the Minnesota Commissioner of Commerce 60 days prior to launching the service.
• Minnesota will also prohibit crypto ATMs starting August 1, 2026.

Governor Tim Walz signed HF 3709 into law, providing banks and credit unions with a clear framework to protect virtual currency and private keys for their customers. The legislation covers the safekeeping, control, and management of digital assets on behalf of third parties.

Minnesota Separates Bank Custody Services From Crypto ATM Risks

Under the new regulations, banks can offer custody services in either a fiduciary or nonfiduciary capacity. Credit unions may provide this service to their members, but only within state and federal regulatory limits.

Any institution offering crypto custody must operate in a safe and prudent manner. Written policies must address risk management, internal controls, cybersecurity, business continuity, and compliance.

Customer cryptocurrency must be kept separate from the assets of the bank or credit union. Institutions may use qualified third-party providers or subcustodians, but oversight remains their responsibility.

Representative Bernie Perryman, one of the bill’s authors, stated that HF 3709 would allow Minnesota’s financial institutions to “evolve alongside their customers and members” instead of directing residents to out-of-state or offshore providers.

Minnesota is also taking a stricter stance on crypto ATMs. Walz signed SF 3868 on May 5, banning virtual currency kiosks statewide starting August 1, 2026. Operators must remove public kiosks by December 31, 2026.

The ban covers the installation, operation, maintenance, and public use of crypto kiosks. Before closing, operators must return customer funds—either in U.S. dollars based on market value or as cryptocurrency sent to a wallet selected by the customer.

The Minnesota Credit Union Network noted that the custody law gives residents “a safer way to manage crypto” through regulated institutions.

The timing aligns with broader U.S. banking policy. Federal guidance on digital asset services has become clearer, with the OCC allowing regulated banks to buy, sell, and custody crypto held for customers.