In Minnesota, the governor’s office approved a new virtual asset law last week. This regulation will allow local banks and credit unions to offer cryptocurrency custody services. The law in question will come into force as of August 1. Thus, Minnesota became the first state in the USA, after Wyoming, Virginia and New York, to introduce clear rules on digital asset storage and create a legal framework on this issue in the Midwestern region.
Scope and application conditions of the new law
According to the legislation, state-approved banks will be able to provide crypto asset storage services to their customers, either trust-based or non-trust-based. Credit unions will be able to offer this service without relying solely on trust. The custody service includes the protection and management of both digital assets and cryptographic private keys. In accordance with the law, customer assets and institutions’ own funds will be kept completely separate; Customer assets will not be considered property of the bank or credit union.
Before launching new services, institutions will be required to submit a plan detailing their internal risk management and cybersecurity policies to the state Commerce Commissioner at least 60 days in advance.
Credit unions and new regulation
St. This law creates a clear, regulated framework for credit unions across the state, focusing on cybersecurity, compliance and member protection, Cloud Financial Credit Union said in a statement. Thus, it was emphasized that credit unions can offer their members safer digital asset storage options in the changing financial environment.
“This legislation brings consumers closer to providing safer and more reliable options within the regulated financial system, while ensuring that credit unions remain relevant in the rapidly changing financial world,” the agency’s approach was summarized.
New ban on ATMs
A blanket ban covering cryptocurrency ATMs and kiosks has also been approved in Minnesota. This regulation will come into force as of August 1. The ATM ban covers all cryptocurrency machines in the state and was signed into law by the governor’s office with bipartisan support.
Representative Erin Koegel, who prepared the bill, emphasized that these devices are used as a tool for fraudsters to target “especially elderly individuals with fixed incomes.” For this reason, it was aimed to remove ATMs for security reasons.
Bitcoin Depot, one of the largest bitcoin ATM businesses in the USA, filed for bankruptcy on Monday following the developments.
Background of the new regulation
Minnesota Credit Union Network believes the new law increases protection against frauds, attacks and risks of loss in crypto asset management. It seems that the state is approaching the issue comprehensively and cautiously, with both regulated custody services and the removal of ATMs.
