Minnesota has legalized crypto custody services for state banks and credit unions. Governor Tim Walz signed HF 3709, giving local financial institutions a regulated path to safeguard customers’ digital assets. The law is set to take effect on August 1, 2026.

The measure allows banks and credit unions to hold, control or manage virtual currency and the private keys used to access it on behalf of customers. However, the framework does not give institutions unlimited freedom to launch crypto products. Services must comply with state and federal law and operate under risk controls.

Before offering custody, a financial institution must notify the commissioner 60 days in advance and describe its risk-management framework. The law also requires written policies for cybersecurity, internal controls, business continuity and compliance. Customer assets must be legally and operationally segregated from the institution’s own balance sheet and cannot be treated as bank or credit union property.

Minnesota institutions may also use qualified third-party service providers or subcustodians, but oversight responsibility remains with the bank or credit union. For the crypto sector, the law is another sign that digital assets are moving from the edges of finance into regulated banking infrastructure.