Minnesota Governor Tim Walz (@GovTimWalz) has signed two cryptocurrency-related bills into law within the same week, marking a significant shift in how the state approaches digital assets. One law opens the door for regulated financial institutions to custody crypto. The other slams it shut on unregulated kiosks blamed for widespread fraud.

Banks and Credit Unions Get the Green Light

Governor Walz signed House File HF 3709 into law, permitting virtual-currency custody services to be offered and performed by financial institutions in the state. Under the new law, qualifying institutions may provide virtual-currency custody services covering 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.

The custody authorization is opt-in. No institution is required to offer the service. Institutions that choose to participate must provide written notice to the commissioner at least 60 days before commencing services, describing the nature of those services and their risk management framework. The law takes effect August 1, 2026, and applies to virtual-currency custody services commenced on or after that date.

The bill passed the House on April 30 by a 130-4 vote, cleared the Senate on May 6 by a 51-16 margin, and received final House concurrence on May 11 by a 119-6 vote before heading to the governor. One of the bill's sponsors framed the legislation as a matter of keeping Minnesota institutions competitive. Representative Bernie Perryman said the bill was about "ensuring that Minnesota-based financial institutions are allowed to evolve alongside their customers and members rather than forcing Minnesotans to rely on unregulated, out-of-state or offshore providers."

As of May 2025, there were 240 commercial insured banks operating in Minnesota, with about $128 billion in assets, and 82 member-owned credit unions under the Minnesota Credit Union Network. St. Cloud Financial Credit Union reported that 20% of its members already hold crypto, signaling strong local demand for regulated custody options.

Crypto ATMs Banned Over Senior Fraud Concerns

In a separate action, Walz signed a law on Tuesday, May 5, banning crypto ATM machines from operating in the state. That legislation, SF 3868, targets crypto ATM fraud aimed at seniors and requires operators to wind down existing machines by August 1.

State officials say that from 2023 to 2025, Minnesota recorded 134 complaints tied to cryptocurrency kiosk fraud, totaling nearly $1 million in reported losses. In 2025 alone, there were 70 cases with more than $540,000 lost, averaging nearly $6,800 per transaction. Minnesota's AARP backed the ban, citing FBI statistics showing older adults are especially vulnerable to scams facilitated through the kiosks.

Earlier consumer protection reforms passed in 2024 proved "fairly ineffective" as fraudsters found ways around transaction caps and required disclosure warnings, according to Sara Payne, an assistant commissioner at the Commerce Department, who said it became "very clear that there is just no such thing as a safe crypto kiosk in Minnesota."

Together, the two laws reflect a deliberate two-track approach from state lawmakers: regulated institutions gain a new service line under proper supervision, while unregulated, high-risk channels are removed entirely.

Sources:
CoinTelegraph: Minnesota Legalizes Crypto Custody Services for Banks, Credit Unions
Minnesota Session Laws, Chapter 93: HF 3709 Full Text
Star Tribune: Minnesota Bans Cryptocurrency ATMs in Response to Growing Fraud Cases