Minnesota Enacts Law Allowing State-Chartered Banks to Offer Crypto Custody Services

The Minnesota state government has taken a significant step towards supporting its regional economy by enacting a law allowing state-chartered banks and credit unions to offer cryptocurrency custody services. This move is designed to prevent capital flight from local communities to major Wall Street crypto platforms, which have been attracting large amounts of deposits in recent years.

The new law requires these institutions to meet strict federal compliance standards, including anti-money laundering (AML) and know-your-customer (KYC) protocols. By empowering community banks to offer secure crypto storage, the state aims to retain deposits, support local lending, and keep its financial ecosystem competitive.