Minnesota Empowers Local Banks to Challenge Wall Street in the Crypto Economy

The state of Minnesota, in the United States, has adopted an unprecedented strategy to counter the influence of Wall Street on the cryptocurrency economy. On May 22, 2026, Governor Tim Walz signed a decree authorizing local banks to offer custody and trading services for cryptocurrencies, a first in the United States. This measure aims to redirect part of the annual revenue estimated at 100 billion dollars from the crypto industry toward regional financial institutions, while reducing dependence on New York financial giants. What happened The decree signed by Governor Tim Walz relies on an expanded interpretation of the Minnesota Financial Institutions Act, allowing local banks to offer crypto services without a specific license. Among the affected actors are U.S. Bancorp, based in Minneapolis, and TCF Bank, which could compete with platforms like Coinbase or Fidelity Digital Assets in managing crypto portfolios for individuals and businesses. No local bank has yet announced a partnership with exchanges, but discussions are underway with Kraken and Gemini. U.S. Bancorp has already begun testing custody solutions for Bitcoin (BTC) and Ethereum (ETH) with its institutional clients, with a public launch scheduled for September 2026. The measure explicitly excludes stablecoins and security tokens, thereby limiting immediate regulatory exposure. Minnesota becomes the third U.S. state, after Wyoming and Texas, to adopt such legislation, but the first to specifically target traditional banks. Why it’s important This initiative is part of a broader trend of “banking cryptocurrencies,” where traditional financial institutions integrate digital assets to meet client demand. Unlike decentralized exchanges or platforms like Coinbase, banks offer institutional custody services, where private keys are held by a trusted third party, reducing risks of loss or theft. However, this centralized approach contradicts the decentralized principle of cryptocurrencies, as it reintroduces a single point of control subject to strict regulations, such as the Bank Secrecy Act. Economically, local banks could capture up to 5% of U.S. crypto revenue, amounting to 5 billion dollars by 2028, according to internal estimates from the regional banking sector. This measure could also influence the market for tokens linked to traditional financial infrastructure, such as the Polygon Ecosystem Token (POL), whose Total Value Locked (TVL) could increase if banks adopt solutions based on public blockchains. Conversely, centralized exchanges may lose market share in states where local banks offer similar services, particularly for institutional clients. If other states follow Minnesota’s example, it could accelerate the adoption of cryptocurrencies by institutional investors, reducing long-term volatility. However, regulatory fragmentation between states could create confusion for investors and federal regulators like the CFTC or SEC, who may challenge the legality of crypto services offered by banks. Points to watch Launch of crypto services by U.S. Bancorp : Scheduled for September 2026, this launch will serve as a test for adoption by other local banks and could influence the strategy of federal regulators. Reaction from federal regulators : The CFTC or SEC may issue guidelines by the end of 2026 to clarify the status of crypto services offered by banks, particularly regarding unregistered derivatives. Adoption by institutional clients : There is no guarantee that Minnesota’s institutional clients will widely adopt these services, especially if the fees charged by banks are higher than those of exchanges. Technical expertise of local banks : Banks may lack the expertise to manage crypto-related risks, such as reentrancy attacks or high gas fees on Ethereum, limiting their ability to compete with Wall Street. Impact on tokens and blockchains : Increased adoption of banking solutions could benefit tokens tied to traditional financial infrastructure, like POL, while DeFi tokens may see their growth slow down.