Minnesota Legislature Allows Banks and Credit Unions to Offer Crypto Custody Services but Tightens ATM Regulation

Odaily reported that the U.S. state of Minnesota has officially passed and signed into law Bill HF 3709, allowing banks and credit unions to offer cryptocurrency custody services, further clarifying the business boundaries of financial institutions in the digital asset space. The bill, signed by Governor Tim Walz, will take effect on August 1, 2026. It requires relevant financial institutions to establish risk management, internal controls, and security policies before launching crypto custody services. They must also notify the state's Department of Commerce 60 days before commencing operations and ensure that client assets are strictly segregated from the institution's own assets.

The bill aims to enable local financial institutions to provide crypto services within a regulatory framework, reducing user reliance on offshore or unregulated platforms and enhancing asset security. Meanwhile, Minnesota has also recently passed Bill SF 3868, which prohibits the installation of new crypto ATMs within the state and requires existing machines to be gradually shut down, raising market concerns over the further tightening of offline crypto access points.

Currently, several U.S. states, including New York, Wyoming, and Virginia, already allow banks to conduct crypto custody business, indicating a divergence in regulatory approaches at the local level in the United States. (The Block)