Minnesota legalizes crypto custody for banks, bans crypto ATMs

Minnesota has enacted a law permitting state-chartered banks and credit unions to offer cryptocurrency custody services, while simultaneously banning cryptocurrency ATMs statewide, in a dual approach to regulating digital assets. Governor Tim Walz signed the custody legislation, House File 3709, which takes effect on August 1, 2026.

The new law allows financial institutions to safeguard, control, or administer digital assets and their private keys on behalf of customers. Banks may offer these services in either a fiduciary or non-fiduciary capacity, while credit unions are restricted to non-fiduciary arrangements. A core requirement mandates that all client digital assets be completely segregated from an institution’s own holdings and never treated as institutional property.

Before launching any custody service, institutions must provide written notice to the Minnesota Commissioner of Commerce at least 60 days in advance, detailing their risk management, cybersecurity, and business continuity plans. They may use qualified third-party service providers or sub-custodians but retain ultimate oversight and compliance responsibility. The Department of Commerce retains the authority...