Minnesota Governor Tim Walz has signed HF 3709 into law, allowing state-chartered banks and credit unions to offer cryptocurrency custody services.
State approves regulated crypto storage through banks
The law lets these institutions store, manage, or control digital assets and private keys for customers. It also allows them to act in either a fiduciary or non-fiduciary role, depending on the service structure.
The rule applies only to services that begin on or after August 1, 2026. Banks and credit unions must also follow strict safety and compliance standards before offering crypto services.
Strict rules on security, reporting, and risk control
Banks and credit unions will need strong internal systems before they can handle crypto custody.
The law requires written policies for risk management, cybersecurity, internal controls, business continuity, and compliance. Institutions must also notify the Minnesota Commissioner of Commerce at least 60 days before launching any service.
Customer assets must be kept separate from the bank’s own holdings. Institutions can use third-party service providers or sub-custodians, but they must still maintain full oversight.
These rules are designed to reduce risks and improve trust in crypto storage through regulated financial institutions.
Crypto ATMs banned as state shifts toward regulated access
At the same time, Minnesota is taking a stricter stance on crypto ATMs. A separate law bans virtual currency kiosks in the state, with full enforcement by August 1, 2026.
Operators must shut down machines and return customer funds before the deadline. The move is aimed at reducing fraud linked to unregulated crypto ATM use.
Lawmakers say the new framework gives residents a safer option through banks rather than kiosks, which are often linked to scams and weak consumer protections. The shift shows a clear policy direction: remove high-risk access points while expanding regulated crypto services inside the traditional banking system.
Notably, Minnesota joined a growing list of U.S. states exploring crypto investments following Donald Trump’s return to office and his pro-crypto stance.
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