What does Minnesota’s new crypto custody law allow banks to do?

Minnesota’s new law allows state-chartered banks and credit unions to provide regulated cryptocurrency custody services starting August 1. That means institutions can legally safeguard customers’ digital assets and private keys under state oversight.

Why is Minnesota’s crypto custody law significant for the US crypto industry?

Minnesota became the first Midwestern state to create a unified legal framework covering both banks and credit unions offering crypto custody. The move could encourage more traditional financial institutions in the region to enter digital asset services.

What is crypto custody and why does it matter?

Crypto custody refers to storing and managing digital assets or private cryptographic keys on behalf of customers. It matters because many crypto holders risk losing access to funds if they misplace passwords or security credentials.

How will Minnesota regulate crypto custody providers?

The law requires banks and credit unions to separate customer crypto assets from institutional funds. Institutions must also submit cybersecurity and risk management plans to regulators at least 60 days before launching services.

Why are banks and credit unions interested in crypto custody services?

Traditional financial institutions want to offer crypto products as digital assets become more mainstream. Banks and credit unions see custody services as a way to keep customers inside regulated financial ecosystems instead of relying on offshore or unregulated platforms.

Is Minnesota banning cryptocurrency entirely?

No. Minnesota is allowing regulated crypto custody services while separately banning crypto ATMs and kiosks statewide from August 1. Lawmakers said the ATM ban targets fraud and scams rather than digital assets themselves.

Why is Minnesota banning crypto ATMs and kiosks?

State lawmakers said crypto ATMs were increasingly being used in scams targeting elderly and vulnerable residents. Officials argued the ban was necessary to reduce fraud involving irreversible cryptocurrency transfers.

How could this law affect crypto adoption in traditional banking?

The law could help normalise crypto services inside regulated banks and credit unions. That may increase trust among mainstream users who are uncomfortable managing private wallets or using crypto-native exchanges.

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Minnesota approves crypto custody for banks

Written by Jon CuthbertPublished May. 19 2026

Minnesota signed legislation allowing state-chartered banks and credit unions to provide regulated cryptocurrency custody services from August 1, making it the first Midwestern state to establish a unified framework for both institutions.

The law requires financial institutions to separate customer digital assets from their own holdings and submit detailed cybersecurity and risk management plans to the Minnesota Commissioner of Commerce at least 60 days before launching services.

“The community banks and credit unions wanted to be able to offer this service for their customers and members as part of a comprehensive array of financial services,”

Said Minnesota State Representative, Steve Elkins.

Minnesota’s new framework defines crypto custody as the safekeeping, controlling or managing of digital assets or private cryptographic keys, while permitting credit unions to operate in a custodial nonfiduciary capacity.

Minnesota Credit Union Network said the law would provide consumers with a safer and more regulated way to manage cryptocurrency while helping financial institutions remain competitive in the evolving digital asset sector.

The legislation arrives alongside a separate statewide ban on crypto ATMs and kiosks, which will also take effect on August 1 after lawmakers raised concerns about scams targeting elderly residents and vulnerable communities.

Representative Erin Koegel, who authored the House version of the ATM ban, said:

“The machines had become a tool for scammers to target some of our most vulnerable neighbors, especially seniors living on fixed incomes.”