Minnesota Permits Banks to Offer Crypto Custody Services

Minnesota has enacted legislation allowing banks and credit unions to offer cryptocurrency custody services. Governor Tim Walz signed HF 3709 into law on Friday, with an effective date of August 1, 2026. The bill permits “certain virtual-currency custody services to be offered and performed” by banking institutions and credit unions, as the state continues to define the regulatory boundaries for crypto-related financial services. According to Rep. Bernie Perryman, one of the bill’s main authors, HF 3709 enables Minnesota-based financial institutions to “evolve alongside their customers and members,” reducing residents’ reliance on unregulated out-of-state or offshore providers for such services.

Compliance Requirements for Crypto Custody

Banks and credit unions offering crypto custody must maintain written policies governing risk management, internal controls, and security. Institutions must also 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 requires financial institutions to ensure the segregation of client assets from the institutions’ own assets.

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

Minnesota Joins Other States With Crypto Custody Rules

Minnesota joins a growing list of states that have permitted certain banks to provide crypto custody services. New York, Wyoming, and Virginia already have similar regulations in place.

Crypto ATM Ban Takes Effect

Separately, Minnesota enacted SF 3868 earlier this month, which bans crypto ATMs and kiosks across the state. 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.