Gov. Tim Walz signed two bills in mid-May that push Minnesota in opposite directions on crypto: one opens the door for state-chartered banks and credit unions to custody digital assets; the other slams it shut on cryptocurrency kiosks.
HF 3709, now Chapter 93 of Minnesota's 2026 Session Laws, was approved by Walz on May 14, 2026, and filed with the Secretary of State on May 15. It takes effect August 1. Under the law, state-chartered banks may offer virtual-currency custody in a fiduciary or non-fiduciary capacity. Credit unions may offer custody in a non-fiduciary capacity. Both may engage third-party subcustodians, provided customer assets are legally and operationally segregated from the institution's own balance sheet and not treated as institutional property. Any institution that opts in must give the Department of Commerce 60 days' written notice before it starts offering services.
Rep. Bernie Perryman (R-St. Augusta), one of HF 3709's lead sponsors, framed the bill at its Commerce Finance and Policy Committee hearing as a competitive defense for community institutions. "House File 3709 is 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 for services that are already in use today," Perryman said, according to the Minnesota House Session Daily account of that hearing.
The Department of Commerce backed the bill. Sam Smith, the department's government relations director, told the committee it "levels the playing field and allows Minnesotans to safely keep their virtual currencies with a trusted community partner like a credit union or bank." Chase Larson, executive vice president and chief lending officer at St. Cloud Financial Credit Union, testified that roughly 20 percent of the credit union's members already own virtual currency and currently have no institutional resource to turn to.
The kiosk ban
Ten days before the custody bill was signed, Walz put his name on SF 3868 on May 5 — a separate measure that bans virtual currency kiosks across the state entirely beginning August 1. Codified as Section 53B.751 of Minnesota Statutes, it prohibits the installation, operation, maintenance, or public availability of any kiosk or electronic terminal used to exchange cash for cryptocurrency. Existing operators have until December 31, 2026, to physically remove machines and pay out any money or virtual currency held for customers — either in dollars at market value or via transfer to a designated wallet.
SF 3868 was co-authored by Sen. Amanda Hemmingsen-Jaeger. The legislation was driven by law-enforcement data: between 2023 and 2025, the Department of Commerce identified approximately 120 consumer complaints linked to crypto kiosks, representing nearly $1 million in losses. In 2025 alone, roughly 70 cases accounted for more than $540,000 in losses, according to the department. State regulators noted that many incidents go unreported and that consumer recovery rates remain low. The fraud pattern is consistent — scammers posing as government officials or tech support direct victims to deposit cash into a kiosk and transfer it to a wallet the scammer controls.
Minnesota is not alone. Indiana and Tennessee enacted similar kiosk prohibitions earlier in 2026, according to legal analysis published by Shipkevich PLLC.
State and national context
On custody, Minnesota becomes the fourth state — after Wyoming, Virginia, and New York — to establish a statutory framework for bank and credit union virtual-asset custody, and the first in the Midwest to do so. The OCC had already issued guidance permitting nationally chartered banks to offer crypto custody services; the Minnesota law extends equivalent clarity to state-chartered institutions that fall outside federal jurisdiction, allowing community banks and credit unions to compete without relying on out-of-state custodians or informal arrangements. Rep. Steve Elkins (DFL-Bloomington), another of the bill's authors, described the measure at the committee hearing as being about "choice, consumer protection and competitiveness."
The Senate passed HF 3709 on May 6 by a 51–16 vote after amending the bill; the House concurred on May 11. The governor's approval on May 14 completed the process.
Sources: Minnesota House Session Daily, story 18926 (committee hearing on HF 3709, including Perryman, Smith, and Larson statements); Minnesota Legislature bill status page for HF 3709, 94th Legislature (2025–26), showing governor approval May 14 and Secretary of State filing May 15; Shipkevich PLLC analysis of SF 3868 on JD Supra (May 2026); Minnesota Senate bill summary for SF 3868.