Minnesota Passes Law Allowing Banks to Custody Bitcoin and Private Keys
An American state has signed a new law allowing banks in the state to hold cryptocurrencies and private cryptographic keys on behalf of their clients.
Summary:
- Minnesota authorized crypto custody services.
- The law applies only to banks.
- Credit unions remain outside its scope.
- Banks will not bear full liability.
- Protection will depend mainly on internal policies.
What the law actually allows
The new rules, signed by the Governor of Minnesota, allow licensed banks in Minnesota to store Bitcoin and private keys for their clients. This includes both the digital assets themselves and the codes that provide access to them.
A private key is essentially a digital ownership code. If it is lost or stolen, a person can completely lose access to their funds.
An important clarification is that the law does not apply to all financial institutions. It covers only banks regulated under specific state laws. Credit unions are currently excluded from the new rules.
Why the lack of fiduciary duty is the most important part
The most controversial element of the law is that banks will offer these services without so-called “fiduciary duty” – the obligation to act entirely in the client’s best interest.
In practice, this means that in the event of issues such as a hacking attack, frozen funds, or lost keys, the bank’s legal liability will be significantly more limited.
If full fiduciary responsibility existed, banks would face much greater risk in the event of a security breach or loss of customer assets.
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Supporters of the law believe that this relief is exactly what will encourage more banks to enter the crypto sector.
JUST IN: 🇺🇸 Minnesota Governor signs bill into law that allows banks and credit unions to offer Bitcoin custody services to customers. pic.twitter.com/blDdD9BjH4
— Bitcoin Magazine (@BitcoinMagazine) May 18, 2026
What protections will still exist
The law still requires banks to maintain internal policies in five key areas:
- risk management
- internal controls
- cybersecurity
- emergency response procedures
- regulatory compliance
The idea is that these mechanisms will provide basic protection for customers.
Critics, however, argue that there is a major difference between written policies and actual accountability. According to them, a bank may formally meet the requirements without that automatically meaning client funds are maximally protected.
The real test is still ahead
The law allows these services to be offered, but it does not require any bank to actually launch them.
That is why the coming months will be crucial. If banks in Minnesota begin offering Bitcoin custody services with clear terms and fees, this will show that the model works.
However, if no real product appears for a long time, it may signal that even the relaxed rules are not enough to convince banks to take on the risk.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
