Gov. Walz Signs Bitcoin Custody Bill, Letting Minnesota Banks Hold Crypto Aug. 1

Minnesota Gov. Tim Walz signed HF 3709, enabling state-chartered banks and credit unions to provide virtual-currency custody services. The law takes effect Aug. 1, 2026, and applies only to services offered on or after that date. Institutions must submit 60 days of written notice to the Minnesota Department of Commerce before launching services. Custody is defined as safekeeping, controlling, or administering digital assets in fiduciary, custodial, or non-fiduciary capacity. Institutions may not trade, invest, or lend the assets. They must maintain written policies for risk management, internal controls, cybersecurity, business continuity, and regulatory compliance, and must hold customer assets separately from their own. Third-party providers may be used, but institutions remain fully responsible. The Department of Commerce can restrict or prohibit activity if it is unsafe or unsound.

"Minnesota Gov. Tim Walz signed HF 3709, letting state-chartered banks offer bitcoin and crypto custody. The law takes effect Aug. 1, 2026, requiring a 60-day Commerce Department notice before services launch. St. Cloud Financial Credit Union reported 20% of members hold crypto, signaling strong local demand. The legislation, now Chapter 93 of the 2026 Session Laws, takes effect Aug. 1, 2026. It applies only to services offered on or after that date."

"Under the new law, qualifying institutions may provide virtual-currency custody services, which cover safekeeping, controlling, or administering digital assets in a fiduciary, custodial, or non-fiduciary capacity. The law does not permit banks to trade, invest, or lend those assets. Institutions opting in must provide 60 days' written notice to the Minnesota Department of Commerce before launching services. They must also maintain written policies covering 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 use qualified third-party service providers but retain full compliance responsibility. The Department of Commerce can prohibit or restrict the activity if it determines the service is unsafe or unsound. Local institutions cited direct member demand as a driver. St. Cloud Financial Credit Union reported that roughly 20% of its members already hold virtual currency but lack trusted local custody options, often turning to unregulated or out-of-state platforms."

"He 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. Rep. Bernie Perryman (R-St. Augusta) sponsored the House version. The Minnesota Credit Union Network and the Department of Commerce supported the bill, pointing to consumer protection, competitive positioning, and alignment with exi"

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