Minnesota OKs Banks, Credit Unions to Offer Crypto Custody

Governor Tim Walz signed HF 3709 on Friday, clearing the way for banks and credit unions chartered in Minnesota to offer certain virtual-currency custody services beginning Aug. 1, 2026. The law requires institutions to maintain written risk-management, internal-control and security policies, submit a written notice to the Minnesota Commissioner of Commerce at least 60 days before starting custody services, and keep client assets segregated from the institution’s own holdings.

The written notice must include details of each institution’s risk-management framework and related controls. The statute directs regulators to review those materials before services begin and specifies that client holdings be kept separate to prevent commingling with the institution’s property.

Custody services typically involve holding private keys or tokens for clients and operating systems that execute transfers. The law frames custody as a supervised activity for state-chartered banks and credit unions, allowing those institutions to file the required policies and notices ahead of launch.

In a March press release, Rep. Bernie Perryman described HF 3709 as intended to let Minnesota-based financial institutions “evolve alongside their customers and members” rather than drive residents to unregulated out-of-state or offshore providers. The Minnesota Credit Union Network called the law “a safer way to manage crypto,” adding it strengthens protections against fraud, hacks and loss through state oversight.

Minnesota joins other states that allow certain banks to offer crypto custody, including New York, Wyoming and Virginia. The legislature also passed SF 3868 earlier this month, which bars new crypto ATMs from being installed after Aug. 1 and requires operators to remove existing kiosks by Dec. 31.

The August 2026 effective date gives institutions time to prepare written policies, implement internal controls and submit the 60-day notices required before launching virtual-currency custody services.