- Governor Tim Walz signed Minnesota’s crypto custody bill HF 3709 into law with bipartisan backing.
- Minnesota banks and credit unions can offer regulated crypto custody services from Aug. 1, 2026.
- New Minnesota crypto rules require cybersecurity controls and customer asset separation.
Minnesota has enacted a new law allowing state-chartered banks and credit unions to provide cryptocurrency custody services, creating a regulated framework for financial institutions to hold and manage digital assets on behalf of customers.
Governor Tim Walz signed HF 3709 into law after it passed the state legislature with bipartisan support. The measure will take effect on August 1, 2026, establishing formal rules for handling cryptocurrencies such as Bitcoin under oversight from the Minnesota Department of Commerce.
The law authorizes banks and credit unions to provide virtual asset custody services in a nonfiduciary capacity, allowing institutions to safeguard customers’ digital assets and manage associated private cryptographic keys.
Minnesota Sets Compliance Rules for Crypto Custody
Financial institutions seeking to offer the services must create internal policies covering cybersecurity, risk management, business continuity planning, and operational controls. The law also requires that customers’ digital assets remain separate from the institution’s own holdings and prohibits banks or credit unions from treating those assets as the institution’s property.
Before launching custody operations, institutions must submit a written notice to the Minnesota Commissioner of Commerce at least 60 days in advance. The filing must detail the institution’s cybersecurity systems and risk management framework.
New Law Could Affect Hundreds of Minnesota Institutions
According to Minnesota government data from May 2025, the state had 240 commercial insured banks with approximately $128 billion in assets and 82 member-owned credit unions operating under the Minnesota Credit Union Network.
The crypto custody measure follows another digital asset law signed by Walz on May 5. That legislation banned cryptocurrency kiosks and ATMs across Minnesota after reports of scam-related incidents involving residents.
The Minnesota law arrives as several crypto-related companies pursue federal-level banking and custody approvals. Earlier this month, Payward, the parent company of Kraken, confirmed it had applied to the Office of the Comptroller of the Currency for a national trust company charter focused on digital asset custody services.
Related: Kraken Parent Payward Pushes for US Crypto Bank Charter
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