A new law passed in the state of Minnesota gives both state banks and credit unions the authority to offer cryptocurrency custody services. However, during the same period, a comprehensive ban on crypto ATMs was also enacted. It is emphasized that the law is the first Midwestern regulation that explicitly covers local financial institutions.
The local financial sector is transforming
It is stated that the increasing outflow of money to crypto exchanges and digital asset platforms in recent years has put local banks and credit unions in Minnesota in a difficult situation. State lawmaker Bernie Perryman stated that the opportunities for economic development and credit support, especially for small and medium-sized organizations in the region, have decreased due to the loss of deposits.
“During this process, we frequently witnessed the resources of local institutions leaving the state. As a result, the resources that can be allocated for investments in the regional economy, housing loans and social projects are decreasing.”
St. According to Meggan Schwirtz, manager of Cloud Financial Credit Union, the issue is not limited to consumer interest; The commercial and competitive value of digital asset technologies for the financial sector is increasing.
It is stated that major Wall Street companies are investing in blockchain infrastructure in the field of payments, custody services and value transfer. Businesses that remain indifferent to this trend may remain in the background in the future of the sector.
Mini dictionary: Tokenization is the creation of digital representations of traditional financial assets or rights on the blockchain. With this method, securities, real estate and similar instruments become more liquid, transparent and quickly transferable.
New regulation and its scope
Last week, with the law signed by Governor Tim Walz, banks and credit unions in Minnesota will be able to provide services in the field of custody and protection of crypto assets. The legislation passed the House with generally bipartisan support and will go into effect on August 1.
In response, a complete ban has been imposed on all crypto ATMs and kiosks across the state. With this regulation numbered SF 3868, ATMs are expected to be closed as of August 1. After the law, Bitcoin Depot, one of the companies with the most bitcoin ATMs in the USA, filed for bankruptcy.
Application and audit processes
While the adoption of the new law was described as an important step for the state, Minnesota Credit Union Network representative Ryan Smith emphasized that the regulation would not be sufficient and additional requirements should be implemented at the federal level. In particular, rules such as anti-money laundering, suspicious transaction reporting and customer verification must be followed.
In order for credit unions and banks to provide these services, they must develop their own internal audit and insurance systems. St. In this context, Cloud Financial Credit Union reached an agreement with a new insurance model supported by Lloyd’s of London.
Competition and the future of the industry
According to the latest report published by Jefferies, it was stated that stablecoin and tokenization could cause a 3% to 5% loss in the equity capital of US banks in the coming years. At the same time, the main topic of discussion at Consensus Miami, one of the most important crypto organizations of the year, was the integration of digital assets into financial infrastructure and the rise of stablecoins in payment systems.
| Feature | Local Credit Union & Bank | Wall Street Financial Institutions |
|---|---|---|
| Targeted Customer | Regional, local individuals and businesses | Global and high volume customers |
| Digital Asset Custody | It starts with new legal authority | previously invested |
| ATM Services | Banned as of August 1 | Continues in operation in some states |
New law in Minnesota allows banks and credit unions to store crypto, while disabling ATMs will lead to changes in local access. Experts point out that the process brings up new risks and responsibilities in financial institutions.
