Minnesota-based banks and credit unions can offer virtual currency custody services starting August 1, following Governor Tim Walz's signing of House File 3709 into law.
The law permits financial institutions to provide these services in a non-fiduciary capacity, using third-party providers as long as client funds are segregated from the institution's assets.
State Representative Bernie Perryman said the bill ensures Minnesota institutions can evolve with their customers, reducing reliance on unregulated providers.
Minnesota hosts 240 commercial banks with $128 billion in assets, 82 credit unions, and is home to U.S. Bancorp, the seventh-largest US bank.
Lawmakers also advanced a bill to ban crypto kiosks and ATMs to combat scams.
Separately, Kraken parent Payward filed for a national trust charter with the OCC to offer fiduciary custody for digital assets.