Minnesota Enacts Law Permitting Banks and Credit Unions to Offer Cryptocurrency Custody

Introduction

Minnesota has become the latest state to legally authorize banks and credit unions to provide cryptocurrency custody services. The move ends years of regulatory ambiguity that kept financial institutions from participating in a digital asset market now valued in the trillions. Proponents argue that the new law will allow residents to access regulated, secure storage for their crypto assets while keeping the state's financial sector competitive.

Details of the New Law

Governor Tim Walz signed HF 3709 into law, which takes effect on August 1, 2026. The legislation permits state-chartered banks and credit unions to hold virtual currency and the cryptographic keys that control it on behalf of their customers and members.

Minnesota joins New York, Wyoming, and Virginia in establishing a clear legal framework for crypto custody by regulated financial institutions.

Requirements for Institutions

Under the law, institutions that wish to offer custody services must adopt written policies covering:

• Risk management
• Internal controls
• Cybersecurity

They are also required to file a written notice with the Minnesota Commissioner of Commerce at least 60 days before launching the service. The notice must include a description of their risk management program.

The law mandates strict segregation of client digital assets from the institution's own holdings. This is a standard requirement in traditional custody law that has now been extended to cryptocurrency.

Supporting Voices

Representative Bernie Perryman, a lead author of the bill, said the legislation ensures Minnesota financial institutions can “evolve alongside their customers and members.” She emphasized that it prevents residents from having to turn to unregulated out-of-state or offshore providers for crypto custody services.

The Minnesota Credit Union Network praised the law, stating that it “gives Minnesotans a safer way to manage crypto” by routing digital asset activity through regulated institutions subject to established oversight.

One Credit Union Already Has a Head Start

While the law will not take effect until 2026, one Minnesota credit union is already operational. St. Cloud Financial Credit Union launched its CU-Digital Asset Vault in March 2025 — more than three months before the law's passage — making it the first credit union in the state to offer members institutional-grade crypto custody.

As of this month, St. Cloud Financial members are safeguarding approximately 13.5 Bitcoin through the platform, according to information provided to Bitcoin Magazine.

Technology Behind the Vault

The Vault runs on Coin2Core©, an infrastructure product built by DaLand CUSO, a credit union-owned technology cooperative. DaLand's stated mission is to keep community financial institutions connected to emerging digital payment and settlement networks.

Chase Larson, an executive at St. Cloud Financial, told Bitcoin Magazine that the new law resolves a structural problem that had blocked many institutions from moving forward, even when leadership wanted to act.

“For too long, credit unions and community banks in Minnesota have been operating in a regulatory gray zone where the absence of clear guidance was itself a barrier to action,” Larson said. “What it practically changes is the liability posture.”

Larson noted that the Vault's architecture was designed around compliance even before the regulations were finalized, giving the credit union a first-mover advantage.

Conclusion

Minnesota's new law marks a significant step toward integrating cryptocurrency into the mainstream financial system. By providing a clear regulatory path for banks and credit unions, the state aims to protect consumers while fostering innovation. With one credit union already offering services, Minnesota positions itself as a leader in the evolving landscape of digital asset custody. The full impact will be seen after the law takes effect in 2026, but the groundwork has been laid for a safer and more accessible crypto environment.