Starting August 1! Minnesota, USA, will allow banks to offer "cryptocurrency custody" services

The governor of Minnesota in the United States signed a new law that opens the door for banks and credit unions to provide cryptocurrency custody services, requires the segregation and safekeeping of assets, and also orders a complete ban on cryptocurrency ATMs.

Minnesota Governor Tim Walz signed a highly indicative virtual currency bill last week, declaring that banks and credit unions within the state will be formally allowed to provide customers with “cryptocurrency custody services.”

Although Wyoming, Virginia, and New York have already taken the lead in the cryptocurrency custody space, Minnesota is still an early leader in this wave of regulatory compliance. The new law, which will take effect on August 1, is seen as a major turning point in the field of digital asset custody.

Steve Elkins, one of the three state representatives who drafted the bill (HF 3709), said this is a significant milestone for the state’s financial development. He said:

Local community banks and credit unions have long been eager to bring this service into the overall financial landscape to meet the needs of a broad range of customers. I have friends who lost all the cryptocurrency in their accounts simply because they lost their account passwords. If trusted banks or credit unions could serve as custodians of account information, this heartbreaking tragedy would not have happened.

Under the bill, state-chartered banks will be allowed to provide virtual asset custody services in the capacity of a “trustee” or a “non-trustee,” while credit unions may provide services only in the capacity of a “non-trust” custodian.

In a post on LinkedIn, St. Cloud Financial Credit Union said the bill establishes a clear regulatory framework for Minnesota credit unions, enabling them to provide cryptocurrency custody services in a regulated environment focused on security, stability, cybersecurity, compliance, and investor protection.

This not only gives consumers a safer and more reliable option within the formal financial system, but also helps credit unions stay competitive amid a rapidly changing financial landscape.

The bill also clearly defines the scope of custody services, including the secure safekeeping, control, or management of digital assets or their encrypted private keys. More importantly, all customers’ digital assets must be separated from the financial institution’s own assets and may not be treated as bank property.

Before providing services, financial institutions must submit a written notice to the Minnesota Commissioner of Commerce at least 60 days in advance, detailing their internal risk management and cybersecurity framework.

The Minnesota Credit Union Network said the new law allows financial institutions in the state to provide “a more secure way to manage cryptocurrencies,” strengthening defenses against fraud, hacker attacks, and asset losses under regulatory oversight.

While Minnesota is welcoming legitimate financial custody, it has also issued a ban on “cryptocurrency ATMs” across the entire state. Tim Walz also signed a bipartisan bill (SF 3868), announcing a complete ban on cryptocurrency ATMs starting August 1. State Representative Erin Koegez, who drafted the House version of the ban, pointed out that these cryptocurrency ATMs lack regulation and have long become tools for scam groups to launder money and pull in funds: “They specifically target vulnerable groups, especially elderly people who rely on pensions.”

• This article is reprinted with permission from: 《Block Party》
• Original title: 《Launched on August 1! Minnesota to Allow Banks to Provide “Cryptocurrency Custody” Services》
• Original author: Block Sister MEL