Minnesota has formally cleared the way for state-chartered credit unions and banks to offer cryptocurrency custody services. After Governor Tim Walz signed the legislation, local financial institutions gained legal authority to safeguard digital assets and private keys for their members.
SF 3794 and HF 3709 establish the legal basis
The new framework is tied to SF 3794 and HF 3709, which authorize Minnesota-chartered credit unions and banks to provide virtual currency custody. The Credit Union Association and St. Cloud Financial Credit Union have publicly confirmed that the law is now in effect, opening a regulated path for traditional local institutions to enter the Web3 digital asset sector.
The measure sets limits as well as permissions. Institutions may provide secure storage, control, or management of virtual currency and related private keys, but the service is defined as non-fiduciary, meaning they are not taking on active investment discretion or operating customer assets.
Custodied crypto must remain separate from firm assets
The law requires customer crypto holdings held in custody to be kept strictly separate from a credit union’s own corporate assets. That segregation rule is central to the structure. It is meant to reduce the chance that problems at the institution spill over into customer accounts.
Oversight will come directly from the Minnesota Department of Commerce, which will supervise the custody business to ensure compliance with state and federal rules. For users seeking a regulated local option to hold digital assets, that supervisory layer is a key part of the model.
Local residents gain a regulated option for private key storage
The stated focus of the measure is security. Before this change, investors often had to rely on lightly regulated third-party platforms or offshore exchanges, exposing funds to hacking incidents, exchange failures, and scams. The source specifically mentions the FTX collapse as a reference point for those risks.
With the new law in place, Minnesota residents will be able to use trusted local financial institutions operating under a state regulatory framework to store digital assets and private keys. The change does not create a new trading channel; it places crypto custody inside a clearer state-level compliance structure.