Authorities in the U.S. state of Minnesota passed a law allowing banks and credit unions to provide digital asset custody services. The new rules will take effect on August 1, 2026, enabling financial institutions to work with cryptocurrencies through third-party custodians.
Minnesota Governor Tim Walz signed bill HF 3709, which permits local banks and credit unions to offer digital currency custody services. Under the legislation, financial institutions will be able to provide such services in a non-fiduciary capacity, meaning they won’t assume the responsibilities of a trustee or fiduciary manager.
The document amends state legislation and allows banks to engage third-party providers and sub-custodians to service clients’ crypto-assets. At the same time, digital assets must remain legally and operationally segregated from the financial institution’s own funds and can’t be recognized as part of its property.
One of the bill’s sponsors, Minnesota House Representative Bernie Perryman, previously stated that the initiative is aimed at adapting local financial institutions to growing client demand. According to her, the law will allow state residents to use regulated local services instead of turning to offshore or unregulated platforms.
Walz also signed a separate measure banning crypto ATMs across the state. The restrictions were justified by a series of fraud cases involving such devices.
As of May 2025, Minnesota had 240 commercial banks with combined assets of approximately $128 billion, as well as 82 credit unions. Minneapolis is also home to U.S. Bancorp, the seventh-largest bank in the United States by assets.
The adoption of digital assets in the U.S. continues to grow rapidly. According to the latest Federal Reserve study, around 10% of American adults used or invested in cryptocurrencies in 2025. Meanwhile, 9% of respondents used crypto-assets as an investment instrument, while 2% used them for payments.
Earlier, crypto companies showed strong interest in obtaining banking licenses, while participants in the traditional finance (TradFi) industry expressed growing interest in providing custody services. The U.S. Office of the Comptroller of the Currency (OCC) granted Bridge permission to operate as a national banking institution, allowed Morgan Stanley to custody crypto-assets, and also approved the establishment of national trust banks for Ripple, BitGo, Fidelity Digital Assets, and Paxos.
