Minnesota empowers local banks to fight Wall Street for crypto revenue

Minnesota has enacted a new law empowering local banks and credit unions to offer cryptocurrency custody services, a move designed to counter the growing flow of deposits from community financial institutions to Wall Street and digital asset platforms.

The legislation, authored by Rep. Bernadette Perryman and signed by Governor Tim Walz, allows state-chartered banks and credit unions to provide crypto custody. Perryman noted that she has heard consistent concerns about deposit flight from local institutions to crypto exchanges and digital asset platforms. The law aims to keep those deposits within the local economy by giving community banks a regulated pathway to participate in the digital asset ecosystem.

For cryptocurrency and digital asset traders, this development signals a broader trend of regulatory accommodation at the state level. As more local banks gain the ability to custody crypto, the infrastructure for institutional-grade digital asset services expands beyond Wall Street. This could improve liquidity and reduce counterparty risk for traders who rely on bank-grade custody. On NowPrice, live crypto prices and charts reflect how the market is reacting to such regulatory shifts, with Bitcoin and major altcoins often showing increased volatility around policy announcements.

Looking ahead, other states may follow Minnesota's lead, potentially accelerating the integration of traditional banking with digital assets. Traders should monitor whether this sparks a wave of similar legislation, which could further legitimize crypto custody and attract more institutional capital. The next key data point will be the adoption rate among Minnesota banks and the subsequent impact on deposit flows.