- Minnesota Governor Tim Walz signed HF 3709 into law, authorizing state-chartered banks and credit unions to offer crypto custody from August 1.
- The law permits institutions to use third-party custodians but requires client crypto assets to be legally segregated from the bank’s own property.
- This state-level move contrasts with crypto companies like Payward (Kraken) seeking federal approval from the OCC for national trust charters.
Minnesota-based banks and credit unions will begin offering cryptocurrency custody services this August after Governor Tim Walz signed HF 3709 into law on Friday. One original sponsor, Bernie Perryman, said the bill aims to let local institutions evolve with customers instead of forcing reliance on offshore providers. The new statute allows these financial entities to operate in a nonfiduciary capacity and engage third-party service providers for custody.
However, the law strictly mandates that client funds be “legally and operationally segregated” from the institution’s assets. Consequently, this could impact operations across Minnesota’s substantial financial sector, which includes 240 commercial banks and 82 credit unions under the Minnesota Credit Union Network. Notably, the nation’s seventh-largest bank, U.S. Bancorp, is based in Minneapolis. Meanwhile, lawmakers also advanced a separate bill to ban digital asset kiosks and ATMs statewide due to scam incidents.
This state-level authorization contrasts with crypto companies seeking federal banking approval. Earlier this month, Payward filed with the OCC for a national trust company charter to offer fiduciary custody. The OCC had already approved or conditionally approved charters for Ripple Labs, BitGo, Circle, Fidelity Digital Assets and Paxos in December. It is now considering an application for World Liberty Financial, co-founded by President Donald Trump and his sons.
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