Minnesota Opens Door for Banks and Credit Unions to Offer Crypto Custody

Minnesota has approved legislation allowing state-chartered banks and credit unions to offer cryptocurrency custody services from August.

This initiative creates a new regulated pathway for consumers seeking institutional digital asset storage, as states continue to expand crypto frameworks. House File 3709 was signed into law on 16 May by Governor Tim Walz, with the framework set to take effect on August 1.

The new legislation allows “certain virtual-currency custody services to be offered and performed” by qualifying institutions. Banks may offer custody directly to customers in either fiduciary or non-fiduciary capacities, while credit unions are limited to non-fiduciary services.

Institutions can also use third-party sub-custodians, provided customer assets remain legally and operationally segregated from the institution’s own balance sheet.

Financial institutions must give at least 60 days’ written notice to the state’s commerce commissioner before launching custody operations, including details on cybersecurity, risk controls, and compliance procedures.

Supporters of the bill said the measure is intended to help local financial institutions remain competitive as digital assets move further into mainstream finance.

State representative Bernie Perryman, one of the bill’s sponsors, said in March that the legislation would allow Minnesota institutions to “evolve alongside their customers” without forcing residents to rely on offshore or lightly regulated crypto providers.

With this legislation, Minnesota joins the ranks of US jurisdictions formalizing digital asset rules to make crypto custody more accessible, as banks continue to explore tokenization and settlement services under clearer regulatory frameworks.