Minnesota has become the latest state to give banks and credit unions legal authority to provide cryptocurrency custody services, a move that critics say is the end of years of legal ambiguity that continued institutions on the market side now worth trillions.
Governor Tim Walz he signed HF 3709 being the law. The law will go into effect on August 1, 2026. The law allows state-run banks and credit unions to hold virtual currency and cryptographic keys that they manage on behalf of customers and members.
Minnesota joins New York, Wyoming, and Virginia, which have also implemented similar measures.
According to the law, organizations that want to provide security services must comply with written policies regarding risk management, internal control, and cybersecurity before they start. They must also file a written notification — including a description of their risk management program — with the Minnesota Commissioner of Commerce at least 60 days in advance.
The law mandates that there should be no significant separation of the digital assets of customers from the companies that hold them, which is required in the traditional privacy law to crypto.
Rep. Bernie Perryman, the bill’s lead author, he said The law ensures that Minnesota financial institutions “can change together with their customers and members,” instead of forcing residents to turn to out-of-state or foreign investors.
The Minnesota Credit Union Network said the law “gives Minnesotans a safer way to manage crypto” by running digital transactions through regulated entities.
Another organization had already started working
St. Cloud Financial Credit Union he started CU-Digital Asset Vault ™ in March—more than three months before the law passed—making it the first credit union in Minnesota to offer members the ability to store cryptocurrencies on campus.
As of this month, members of St. Cloud Financial is protecting approximately 13.5 Bitcoin through the platform, the organization said. Bitcoin Magazine.
Vault is powered by Coin2Core ©, a product developed by DaLand CUSO, an industry technology collaboration that aims to keep local financial institutions aligned with emerging digital payments.
Chase Larson, director of St. Cloud Financial, he said Bitcoin Magazine that the new law solves the problem of the system that prevented many organizations from moving forward, even if the administration wanted it.
“For too long, credit unions and community banks in Minnesota have operated in a gray area where a lack of clear guidance was a barrier to action,” Larson said. “What changes is how it is.”
Vault architecture was designed around tracking before it was understood, according to Larson. The system uses a secured operating system where no single party – not the credit union, not the member, not DaLand – has independent control over the member’s finances.
Larson said member responses centered on three common themes: trust in the organization, ease of use, and the comfort of having a home team, a close relationship with a conservation partner.
“Members participating in the CU-Digital Asset Vault ™ have extensive discussions on financial issues, long-term asset ownership, security, and the future of digital assets,” he said. “That’s the kind of deep friendship that the conservative philosophy was designed to foster.”
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The law is attracting attention from organizations in Minnesota and beyond. Larson said the conversation that started early was “is this legal?” now they start with “How do we do this effectively and efficiently?”
He prepared the law as part of the national model, seeing the wave of growth of the government level crypto laws applied through laws throughout the country.
“Financial transactions, financial transactions, and cost savings are improving, and digital networks will increasingly coexist with financial systems,” Larson said.
The long road of St. Cloud Financial – internally called R-Path © – sees growth from prison to payments supported by blockchain, real-time payments, stablecoin systems, and other digital financial services as the ecosystem grows.
Larson said the legislation does not change the plan. “The law doesn’t really change our approach,” he said. “This validates the path we were on before.”
The law will go into effect on August 1. Organizations wishing to provide human resource services by that date must submit their 60-day notice to the Commerce Commissioner by June 2.
