Minnesota authorizes banks for crypto custody

TLDR

Minnesota has passed a law that will let state-chartered banks and credit unions offer regulated crypto custody starting August 1, 2026.

1. The new law (HF 3709) authorizes banks and credit unions to hold virtual currencies for customers, with strict segregation and compliance rules.
2. It could extend bank-grade custody to hundreds of local institutions, while a separate bill bans crypto ATMs to curb scams.
3. Impact depends on which banks opt in, how they structure services, and how US federal rules on digital asset custody evolve.

Deep Dive

1. What The Law Actually Does

Governor Tim Walz signed House File 3709 into law, allowing Minnesota-based banks and credit unions to offer virtual-currency custody services beginning August 1, 2026, in a nonfiduciary capacity.[](https://cointelegraph.com/news/minnesota-crypto-custody-services-banks-credit-unions-law)

Institutions must keep customer crypto legally and operationally segregated from their own assets, and they can use third-party service providers or subcustodians, but remain responsible for compliance.[](https://cointelegraph.com/news/minnesota-crypto-custody-services-banks-credit-unions-law)

The law is opt in. Banks are not required to offer custody, must give the Commerce Department 60 days notice, and are restricted to safekeeping and administration, not trading, lending, or investing customer coins.[]()

2. Why This Matters For Crypto Users

Minnesota has about 240 insured commercial banks with roughly 128 billion dollars in assets and 82 credit unions,[]() so the law potentially opens regulated custody to a broad local footprint.

Backers argued it lets Minnesota-based financial institutions evolve alongside their customers instead of pushing residents to unregulated offshore platforms for custody.[](https://cointelegraph.com/news/minnesota-crypto-custody-services-banks-credit-unions-law)

For crypto holders, bank custody could mean stronger consumer protection standards, clearer recourse, and easier integration with traditional accounts, but likely with conservative asset lists and higher compliance checks.

3. Ban On ATMs And What To Watch

On the flip side, Minnesota has also passed a separate law banning crypto kiosks and ATMs statewide by August 1, citing fraud cases that hit residents, especially seniors.[]()

Together, the two laws shift activity away from high-risk, lightly supervised channels toward regulated institutions that already sit under banking and consumer protection rules.

Key things to watch are:

1. Which banks and credit unions actually launch custody.
2. Whether they support only Bitcoin and large caps or a broader set of tokens.
3. How future US federal guidance on bank crypto custody interacts with Minnesotas framework.

Conclusion

Minnesota is tightening its crypto perimeter, removing unregulated ATMs while inviting banks and credit unions to offer tightly controlled custody.

For crypto users, this could gradually expand safer, bank-style storage options for major assets, though innovation and asset choice may remain limited by regulation and risk appetite.