Minnesota Signs Crypto Custody Bill, Setting Rules for Banks and Credit Unions from Aug. 1, 2026

Minnesota Governor Tim Walz has signed HF 3709 into law, clearing the way for state-chartered banks and credit unions to offer cryptocurrency custody services under a formal regulatory framework. The legislation, which passed the state legislature with bipartisan support, takes effect on August 1, 2026. Oversight will sit with the Minnesota Department of Commerce, and the rules apply to the custody of cryptocurrencies such as Bitcoin. Under the new law, banks and credit unions may provide virtual asset custody in a nonfiduciary capacity, including safeguarding customers’ digital assets and managing associated private cryptographic keys. Institutions must adopt internal policies covering cybersecurity, risk management, business continuity planning, and operational controls. The law also requires customer digital assets to be segregated from an institution’s own holdings and bars banks or credit unions from treating those assets as their property. Before launching custody operations, an institution must notify the Minnesota Commissioner of Commerce in writing at least 60 days in advance, including details of its cybersecurity systems and risk management framework. Minnesota government data from May 2025 lists 240 commercial insured banks in the state with about $128 billion in assets, along with 82 member-owned credit unions operating under the Minnesota Credit Union Network. HF 3709 follows another digital-asset measure Walz signed on May 5 that banned cryptocurrency kiosks and ATMs statewide after reports of scam-related incidents involving residents. The move comes as crypto-focused firms seek federal banking and custody approvals. Earlier this month, Payward, the parent company of Kraken, said it had applied to the Office of the Comptroller of the Currency for a national trust company charter centered on digital asset custody. Disclaimer: This material is for informational and educational purposes only and does not constitute financial advice. Coin Edition is not responsible for losses arising from the use of referenced content, products, or services. Readers should use caution before taking action related to any company.