ST. PAUL, Minn. — New legislation in this state that allows Minnesota banks and credit unions to offer certain cryptocurrency custody services beginning Aug. 1 is important for what it “signals,” according to one CU leader.
As the CU Daily reported here, under House File 3709 Minnesota state-chartered banks and credit unions will be authorized to provide virtual-currency custody services in a nonfiduciary capacity beginning Aug. 1.
The law requires financial institutions to provide written notLarFrank ice to the Minnesota Department of Commerce at least 60 days before launching cryptocurrency custody services and to establish written policies and procedures governing the business, according to the Minnesota House of Representatives.
The law will permit banks and credit unions to use third-party service providers or subcustodians, provided customer digital assets are legally and operationally segregated from the institution’s own assets and are not treated as institutional property.
Important ‘Signal’
“The Minnesota legislation is significant not simply because of what it permits, but because of what it signals,” said Chase Larson, EVP/CLO with St. Cloud Financial Credit Union. “For many financial institutions, the absence of clear regulatory guidance around digital asset safekeeping created hesitation, even as member interest and broader financial infrastructure continued evolving. This legislation helps create clearer footing for regulated institutions to responsibly engage in this space within a governance-first framework.”
As the CU Daily has also reported, St. Cloud Financial CU has been among the most progressive CUs in the country in the crypto space. It recently said it has surpassed 10 Bitcoin safeguarded in its CU-Digital Asset Vault, a milestone it noted it hit within the first weeks of availability to members. It has partnered with DaLand CUSO on the offering.
‘Much Broader Evolution’
“At St. Cloud Financial Credit Union, we view this as part of a much broader evolution in payments, money movement, settlement, and digital financial infrastructure. The real question is not whether institutions are ‘interested’ in digital assets,” Larson added. “Financial infrastructure is evolving, and digital asset networks will increasingly exist alongside traditional finance. Credit unions have a responsibility to understand where member behavior and commerce are moving and determine how to responsibly serve members within that reality.”
Larson said that in many ways the conversation now being had connects directly back to the original purpose of the credit union movement itself, which is to be decentralized, community-based access to financial services and capital.
‘Opportunity’ for CUs
“As financial infrastructure becomes increasingly digital, we believe cooperative financial institutions again have an opportunity to help ensure financial access, governance, and member relationships remain anchored within local communities rather than becoming concentrated within a small number of large platforms or institutions,” Larson said. “That is part of why this legislation matters. It creates a clearer path for regulated, community-focused financial institutions to responsibly participate in the next evolution of financial infrastructure rather than watching it develop entirely outside the cooperative financial system.”
