Minnesota lawmakers approve bill enabling banks, credit unions to provide virtual-currency custody services

A measure led by State Rep. Keith Allen is set to allow Minnesota banks and credit unions to deliver virtual-currency custody services, following its passage in both legislative chambers, according to the Minnesota State Legislature.

The legislation cleared the House on a 119-6 vote and the Senate on a 51-16 vote, after being presented to the governor on May 12, 2026.

Known as HF3709, the bill was introduced Feb. 25, 2026, during the 2026 regular session of the 94th Legislature. The measure is formally titled: ‘Virtual-currency custody services allowed to be offered and performed.’

Below is an overview developed from the actual bill text that may include explanations for clarification.

The legislation permits financial institutions and credit unions in the state to provide security and management for virtual currency and private keys, acting either in fiduciary or nonfiduciary roles. These entities must operate securely, adopt written policies for risk management and compliance, and notify the commissioner at least 60 days before commencing such services, outlining their offerings and risk procedures. They are required to separate customer assets from institutional holdings and may engage approved third-party providers, but must maintain oversight. The bill goes into effect Aug. 1, 2026, and does not authorize any activity prohibited by law or alter the legal standing of virtual currency.

In the House, 53 Democrats and 66 Republicans supported the bill; six Democrats voted against it.

In the Senate, 32 Democrats and 19 Republicans backed the legislation, while two Democrats and 14 Republicans registered opposition.

The bill was spearheaded by Rep. Keith Allen (Republican-19th District), with co-sponsors Rep. Bernie Perryman (Republican-14th District), Rep. Steve Elkins (Democrat-50th District), and one additional lawmaker.

Allen holds an AS from Hawkeye Community College and a BS from the University of Minnesota.

A Republican, Allen was elected in 2025 to represent Minnesota’s 19A House District, succeeding Brian Daniels.

In Minnesota, bills may originate in either the House or Senate, are generally referred to committees for consideration and amendment, and, if approved, advance to full chamber debates and votes. Once both chambers pass the same bill, it is forwarded to the governor to sign, veto or become law without signature. The Minnesota Legislature meets annually, typically beginning in January, introducing thousands of bills each session while only a fraction become law.

Information in this article was obtained from the Minnesota State Legislature. The source data can be found here.