Minnesota Banks Authorized to Offer Cryptocurrency Custody Services
- Minnesota becomes the first Midwestern state to pass a law allowing banks and credit unions to provide cryptocurrency custody services.
- The law, signed by Governor Tim Walz, will take effect on August 1.
- A Jefferies report estimates that digital dollar adoption could lead to a 3% to 5% runoff in core deposits over five years.
- Local financial institutions express concerns over deposit flight to crypto exchanges impacting community lending opportunities.
- A statewide ban on crypto ATMs is set to coincide with the new custody law, effective August 1.
The legislative move aims to retain local deposits and ensure competitive relevance against larger financial institutions engaging in stablecoin and blockchain technology adoption.
With the new law, Minnesota’s banks can now offer essential services amid growing competition from Wall Street, addressing potential deposit losses estimated at up to 5%. (Source)
