Minnesota is taking a bigger step into digital assets by approving a new law that lets banks and credit unions offer crypto custody services.
Governor Tim Walz signed House File 3709 into law, allowing Minnesota financial institutions to hold and manage virtual currencies for customers starting August 1.
The law lets banks and credit unions offer crypto custody services without taking ownership of the assets. This means they can keep digital assets safe for customers. The law also allows financial firms to work with third-party providers or specialized sub custodians, as long as customer funds stay separate from the institution’s own assets.
Supporters of the bill said Minnesota institutions need to adapt to changing consumer demand. Representative Bernie Perryman, one of the bill’s sponsors, said the goal was to stop residents from using offshore or lightly regulated crypto service providers.
This change could have a big impact on Minnesota’s banking sector. The state has hundreds of commercial banks and many credit unions, including large institutions like U.S. Bancorp, which is based in Minneapolis.
The approval for crypto custody comes just days after Minnesota passed new restrictions on crypto ATMs and digital asset kiosks, following concerns about more scams targeting residents.
This new law is part of a larger trend in the U.S., where more traditional financial institutions are looking into regulated crypto services. Companies like Payward, the parent of Kraken, and other crypto firms are also seeking federal trust charters to expand their digital asset custody services.
Supporters think that regulated custody services from established banks could help protect consumers and build trust in the digital asset industry. However, critics warn that banks entering crypto could still face operational and regulatory risks because of the market’s volatility.
LATEST: 🏦 Minnesota has enacted a law authorizing banks and credit unions to offer crypto custody services, effective Aug. 1, 2026. pic.twitter.com/dqGZplffLs
— CoinMarketCap (@CoinMarketCap) May 19, 2026
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