Minnesota Allows State Banks, Credit Unions to Custody Bitcoin

Gov. Tim Walz signed HF 3709 into law, authorizing state-chartered banks and credit unions to custody bitcoin and other virtual currencies for customers beginning Aug. 1, 2026. The authorization applies only to custody services offered on or after that date.

The law defines virtual-currency custody to include safekeeping, controlling or administering digital assets in a fiduciary, custodial or non-fiduciary capacity. It does not allow banks or credit unions to trade, invest or lend those assets.

Institutions that choose to offer custody must give 60 days’ written notice to the Minnesota Department of Commerce before launching services and must maintain written policies on risk management, internal controls, cybersecurity, business continuity and regulatory compliance.

Customer assets must be held separately from an institution’s own holdings. Banks and credit unions may rely on qualified third-party service providers for custody functions, but they remain fully responsible for regulatory compliance. The Department of Commerce may prohibit or restrict custody activities if it finds a particular offering would be unsafe or unsound.

The House passed HF 3709 on April 30, 2026, by a 130-4 vote. The Senate approved an amended version on May 6 by 51-16, and the House concurred with the amendments on May 11 by 119-6. The measure is Chapter 93 of the 2026 Session Laws.

Rep. Bernie Perryman, R-St. Augusta, said, ‘The bill ensures Minnesota-based financial institutions are able to evolve alongside their customers rather than forcing Minnesotans to rely on out-of-state or offshore providers.’

St. Cloud Financial Credit Union reported about 20% of its members hold virtual currency and lack trusted local custody options. The Minnesota Credit Union Network and the Department of Commerce supported the bill, citing consumer protection and alignment with federal guidance that permits banks to offer custody services.

A separate law, SF 3868, bans virtual-currency kiosks statewide and requires operators to wind down existing machines by Aug. 1, 2026. That bill targets fraud aimed at seniors and other high-risk activity tied to unregulated crypto ATMs.

HF 3709 does not change Minnesota’s money transmission licensing framework and does not expand bank authority into broader crypto activities beyond custody. The custody authorization is optional; no institution is required to offer the service. The full enacted text is available from the Minnesota Revisor of Statutes under Session Law Chapter 93.