Minnesota Permits Banks to Offer Crypto Custody Services

Minnesota has enacted legislation permitting banks and credit unions to offer cryptocurrency custody services, with Governor Tim Walz signing HF 3709 into law on Friday. The bill takes effect on August 1, 2026, as the state continues establishing regulatory frameworks for crypto-related financial services. Rep. Bernie Perryman, a main author of the legislation, stated that HF 3709 allows Minnesota-based financial institutions to “evolve alongside their customers and members,” rather than forcing residents to rely on unregulated out-of-state or offshore providers. Minnesota joins New York, Wyoming, and Virginia in permitting certain banks to provide crypto custody services.

Regulatory Requirements

Banking institutions and credit unions offering crypto custody services must maintain written policies governing risk management, internal controls, and security, among other compliance measures. They are required to submit written notice—including details of their risk management frameworks—to the Minnesota Commissioner of Commerce at least 60 days before commencing crypto custody services. The legislation also mandates that banks and credit unions ensure the segregation of client assets from the institutions’ own assets.

Industry Support

The Minnesota Credit Union Network, a state trade association, stated Friday that the legislation “gives Minnesotans a safer way to manage crypto” and strengthens protections against fraud, hacks, and loss through regulatory oversight.

Crypto ATM Ban

Minnesota enacted a separate bill earlier this month that bans crypto ATMs and kiosks across the state. The legislation, SF 3868, stipulates that as of August 1, no new crypto ATMs can be installed, and existing kiosks may no longer operate. Operators must remove all crypto kiosks by December 31.