Committee hears bills to let Minnesota institutions offer digital‑asset custody; discussion leaves measure laid over

Senate File 3794, a bill to authorize Minnesota banks and credit unions to provide custodial accounts for digital assets, received extended discussion in the Commerce Committee on March 10 and was laid over for further consideration.

Senator Seaburger said the measure would allow state‑chartered financial institutions to offer custody and safekeeping services under supervision and mirrored protections already applied to other custodial services. "This framework and protection matters to Minnesotans and helps ensure that innovation happens here under Minnesota's regulatory supervision," he said.

Witnesses from the credit‑union and banking community — including Ryan Smith of the Minnesota Credit Union Network and Chase Larson of St. Cloud Financial Credit Union — described consumer protection benefits, hybrid self‑custody models and the ability to stop deposit outflows to out‑of‑state exchanges. Larson said his credit union obtained bond protection for risks such as internal fraud and loss of keys.

Department of Commerce testimony (Jason Huff) indicated the agency supports incorporating virtual currencies into the regulatory framework where appropriate. Members probed whether custodial assets would be on or off the institution’s balance sheet, what insurance or bond requirements would apply, and the distinction between insured deposit accounts and uninsured custodial safety‑deposit services.

Senators requested clarity on liability, disclosure to consumers and potential systemic risk; the bill was laid over to allow further work on those issues. No committee vote to advance was recorded in the transcript.