Minnesota will allow state-regulated banks and credit unions to offer cryptocurrency custody services starting August 1, 2026, under a new law signed by Governor Tim Walz. The legislation, HF 3709, requires custodians to establish written risk, security, and asset segregation policies. Concurrently, the state has enacted a complete ban on cryptocurrency ATMs, mandating the removal of all existing kiosks by December 31.
Minnesota has approved a law permitting banks and credit unions to offer crypto custody services. The measure focuses on notice, internal controls, security, and asset segregation requirements for safer oversight.
Governor Tim Walz signed HF 3709 on Friday. According to the Minnesota Legislature website, it permits certain virtual-currency custody services to be offered.
The law takes effect on Aug. 1, 2026, establishing guidelines for participating institutions. They must have a written policy in place prior to introducing the service, covering risk management and compliance.
These institutions must also inform the Minnesota Commissioner of Commerce in writing at least 60 days prior to commencement. The notice must include information about their risk management framework for state review.
Rep. Bernie Perryman, a main author of the bill, supported it in a March press release. Minnesota financial institutions should have the opportunity to move with customers and members, he said.
Residents should not be forced to choose an out-of-state or offshore provider that may be unregulated, Perryman stated. His comments were related to crypto custody access via locally regulated custodians.
The Minnesota Credit Union Network welcomed the law, stating it provides a secure solution for crypto management. Oversight can enhance protection from fraud, hacks, and loss, the group said.
Minnesota joins New York, Wyoming, and Virginia as states with similar rules. The state has taken a stricter approach to crypto ATMs, however.
Minnesota passed SF 3868 earlier this month, which prohibits the use of crypto ATMs or kiosks. As of Aug. 1, no new machines can be installed, and existing ones must be removed by Dec. 31.
Last month, Canada said it intends to ban crypto ATMs, citing fraud and money laundering risks. Bitcoin ATM operator Bitcoin Depot announced on Monday it had filed for Chapter 11 bankruptcy and would wind down its business.
