Minnesota lawmakers signing HF 3709 pave the way for state-based banks and credit unions to offer virtual-currency custody services in a nonfiduciary capacity beginning August 1. The measure, signed by Governor Tim Walz, amends state statutes to allow financial institutions to engage third-party service providers or subcustodians to facilitate crypto custody, provided funds are legally and operationally segregated from the institution’s assets and not treated as property of the bank or credit union.

According to Cointelegraph, the legislation is positioned within a broader regulatory push to bring crypto custody into regulated financial channels, reducing reliance on unregulated or out-of-state providers and aligning Minnesota institutions with compliance expectations around asset segregation and fiduciary risk controls.

The bill’s proponents argued the policy would enable Minnesota-based financial institutions to evolve alongside their customers while protecting residents from opaque or offshore custody arrangements. It takes effect in August and could influence operations across the state’s banking and credit-union landscape.

The Minnesota government information portal notes the scale of the state’s financial sector: as of May 2025, 240 commercial insured banks operated in Minnesota with about $128 billion in assets, and 82 member-owned credit unions were under the Minnesota Credit Union Network. Minneapolis is home to U.S. Bancorp, the country’s seventh-largest bank by assets, underscoring the potential impact on major state institutions.

The policy comes in a broader policy milieu. In Minnesota, lawmakers also advanced a separate bill to ban digital asset kiosks and ATMs in response to incidents of scams targeting residents, signaling a multifaceted approach to crypto-related risk within the state.

Key takeaways

• The new law authorizes Minnesota banks and credit unions to provide virtual-currency custody services in a nonfiduciary capacity starting August 1.
• Institutions may use third-party service providers or subcustodians to facilitate custody, with funds segregated from the bank’s or credit union’s assets and not treated as the institution’s property.
• The change could affect operations across the entire Minnesota financial-services sector, given the size of the state’s banking and credit-union markets.
• The move sits within a broader regulatory context, including federally focused custody initiatives and ongoing discussions about licensing and oversight for crypto firms seeking national charters.

Legal framework and operational mechanics in Minnesota

HF 3709 amends Minnesota’s statutes to permit supervised financial institutions to offer virtual-currency custody services without assuming fiduciary duties. The law explicitly allows engagement with third-party subcustodians or service providers to support custody activities, so long as the funds involved remain segregated from the institution’s assets and are not considered property of the institution. The framework thus creates a regulated channel for crypto custody within traditional banking and credit union operations, reducing the governance and insolvency risk associated with unregulated custody arrangements.

From a compliance perspective, the statute emphasizes asset segregation and operational separation, which are core elements of AML/KYC controls and banking supervision. While the law does not establish a broad fiduciary custodial obligation, it signals a move toward formalized oversight of crypto custody activities by Minnesota financial institutions, aligning state policy with evolving best practices in digital-asset stewardship.

Regulatory backdrop: federal charters, custody services, and market dynamics

Beyond state-level changes, the cryptocurrency custody landscape in the United States is shaped by federal regulatory initiatives and the pursuit of national charters. In a separate development, Payward—the parent company of the Kraken exchange—announced it had filed with the Office of the Comptroller of the Currency (OCC) for a national trust company charter intended to provide fiduciary custody and related services primarily for digital assets, subject to regulatory approval.

Historically, the OCC has approved or conditionally approved national-charter applications from other crypto-related firms, including Ripple Labs, BitGo, Circle, Fidelity Digital Assets, and Paxos, with discussions ongoing regarding additional candidates. Reports indicate that regulators are weighing how fiduciary custody fits within a unified national framework, a trend that could shape how state custody provisions, like Minnesota’s HF 3709, interface with federal licensing and oversight. This broader regulatory momentum was highlighted in reporting on the sector’s evolving charter landscape.

For institutions and firms seeking synchronized operations across state lines, the interaction between state authorization for in-state custody services and federal charter options remains a key area of policy development. The emergence of national trust charters could influence bank and nonbank participants’ willingness to provide custody services across multiple jurisdictions, intensifying AML/KYC, licensing, and prudential requirements across the ecosystem.

Policy alignment, risk considerations, and future outlook

The Minnesota statute’s design reflects a deliberate policy choice to retain custody capabilities within regulated domestic institutions, fostering in-state competition while mitigating the risks associated with unregulated custody arrangements. The development matters in practice because it has the potential to reshape the custodial outsourcing decisions of Minnesota-based banks and credit unions, with implications for risk management, vendor governance, and regulatory reporting.

From a compliance perspective, the policy underscores the importance of robust third-party risk management, asset segregation, and clear accounting treatment for crypto assets. It also highlights how state-level actions interact with federal licensing trajectories and international-policy considerations, including alignment with AML/KYC frameworks and any forthcoming cross-border regulatory guidance. The ongoing dialogue about national charters and the possible standardization of custody practices points to ongoing uncertainty and the need for institutions to monitor regulatory guidance, licensing pathways, and supervisory expectations as they implement custody offerings.

For market participants, the Minnesota step adds another layer to the evolving custody infrastructure in the United States, particularly for institutions seeking to offer digital-asset services in a regulated banking context. As state policies converge with federal charters and harmonized supervisory expectations, banks and credit unions may reassess their procurement, risk, and governance approaches to crypto custody, potentially impacting licensing, vendor selection, and operational resilience.

Looking ahead, policymakers will likely weigh the balance between enabling regulated custody services and maintaining robust consumer protections. The interaction between Minnesota’s framework and federal charter initiatives will be a focal point for institutional risk teams, compliance programs, and legal counsel as custody services mature within the U.S. financial system.

Closing observations: Minnesota’s approach signals a measured move toward regulated, domestic custody services within traditional banking structures, while the federal-charter conversation indicates a broader institutional shift toward standardized, scalable digit asset custody. Institutions should track regulatory developments at both state and federal levels to assess licensing requirements, custody governance, and cross-border implications.

The post-bankruptcy trust representing Prime Trust’s creditors has taken legal aim at Swan Bitcoin, filing a suit in Delaware bankruptcy court alleging the Bitcoin custodian exploited insider access to move roughly $1 billion in assets from Prime Trust ahead of its August 2023 collapse.

The complaint, submitted by the Prime Trust litigation trust, asserts that Electric Solidus—the corporate entity behind Swan Bitcoin—received more than $24.6 million in cash, 11,994 BTC (valued at about $923 million at the time of filing), roughly $5 million in USDT, and smaller amounts of other digital assets before Prime Trust filed for bankruptcy. Central to the allegations is a Prime Trust senior executive who, while employed at Prime, also served as a paid adviser to Swan in a side arrangement dating back to July 2019.

Four days before Prime Trust met with Nevada regulators on May 26, 2023, the executive allegedly opened an encrypted chat with Swan Chief Executive Cory Klippsten and set messages to auto-delete every 24 hours. The feature was reportedly turned off the day after the regulatory meeting, when Swan withdrew more than 10,000 BTC from Prime Trust.

The lawsuit forms part of a broader effort by Prime Trust’s post-bankruptcy litigation trust to recover assets moved out of the custodian in the weeks leading up to its collapse. The filing argues Swan leveraged insider access to shift assets ahead of Prime Trust’s deteriorating financial condition, effectively prioritizing its own holdings over other customers.

“Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses,” the complaint states.

Cointelegraph reached out to Swan for comment, but did not receive an immediate response.

Related: House Committee pushes Trump to fill CFTC seats as crypto regulation ramps up

Key takeaways

• The Prime Trust litigation trust accuses Swan Bitcoin of using insider access to drain assets from Prime Trust in the run-up to its bankruptcy.
• Assets alleged to have moved include 11,994 BTC (approximately $923 million at filing time), plus cash and USDT, totaling around $1 billion in value referenced by the complaint.
• An unnamed Prime Trust executive with ties to Swan allegedly coordinated pre-bankruptcy transfers, including an encrypted chat that auto-deleted messages for a period.
• The filing claims an internal ledger created shortly before the Nevada regulator meeting, titled “PT FBO Swan Customers,” was designed to obscure that Swan’s funds were not actually held in a separate trust for Swan’s customers.
• The litigation seeks to recover assets under preferential transfer and fraudulent transfer provisions of the Bankruptcy Code and seeks to disallow future claims until restitution is made.

Insider leverage and the timing of asset moves

The core accusation centers on a Prime Trust executive who simultaneously served Swan as a paid adviser, creating a potential conflict of interest as Prime Trust’s financial health weakened. The filing describes a sequence in which, just days before a regulatory encounter in Nevada, an encrypted channel with Swan’s leadership enabled accelerated transfers. The purported purpose, according to the complaint, was swift asset relocation to avoid losses as Prime Trust faced mounting pressure.

Those transfers culminated in a notable withdrawal of more than 10,000 BTC shortly after the Nevada meeting, a move the suit characterizes as part of a broader evacuation of customer assets. Slack communications cited in the filing allegedly show Prime Trust staff scrambling to comply with requests or directives as the day closed, underscoring the chaotic context in which the transfers occurred.

Internal ledgers and the argument over asset custody

A focal point of the allegations is the claim that Prime Trust created an internal ledger labeled “PT FBO Swan Customers” on May 25, a record that did not exist previously. The suit contends this ledger gave the appearance that Swan’s assets were held in a separate, customer-specific trust, a structure that would complicate any future clawback efforts in bankruptcy. In substance, the complaint argues, those assets were not actually held in trust for Swan’s customers, suggesting an attempt to mislead creditors and regulators about asset custody during a period of financial stress for Prime Trust.

What the case seeks and potential implications

The Prime Trust trust seeks relief under the Bankruptcy Code’s preferential transfer and actual fraudulent transfer provisions. The plaintiffs also request a court order disallowing any future claims Swan might assert against the estate until restitution is made. If successful, the action could set a precedent for how transfers involving crypto custodians are treated in bankruptcy, with potential ripple effects for other platforms that rely on custodial arrangements during distress.

The case also spotlights broader questions about governance, insider relationships, and the potential for rapid asset movement in the crypto custody landscape. As regulators increasingly scrutinize custody practices and the pathways assets can take during financial duress, outcomes from this litigation may influence risk management standards and disclosure requirements across the sector.

Closing perspective

As the case unfolds, observers will be watching how the court addresses the credibility and scope of the transfers alleged in the filing, and whether restitution can be secured for Prime Trust’s creditors. The episode underscores the ongoing tension between rapidly evolving crypto custody models and traditional bankruptcy frameworks, raising questions about best practices for safeguarding customer funds when a custodian nears insolvency.

Key takeaways

• CHZ is up 5% in the last 24 hours and is now approaching the $0.05 resistance level.
• The derivatives data indicate that the bulls are in control at the moment.

Chiliz outperforms the broader crypto market

Chiliz (CHZ) is one of the best performers among the top cryptocurrencies, as the coin is up by 5% in the last 24 hours. Thanks to its latest rally, CHZ is trading at $0.049 and could rally higher in the near term.

The momentum indicators remain constructive, indicating that CHZ could extend its rally over the next few hours and days. 

Data obtained from CoinGlass shows that the futures’ Open Interest (OI) at exchanges in Chiliz surges to $80 million on Tuesday, up from $58 million in the previous week.

This is the highest Chiliz’s OI has been since January. The rising OI indicates that new or additional bullish positions are opening in the market, suggesting a bullish outlook for CHZ. 

Furthermore, Chiliz’s funding rates flipped positive on Sunday and surged to 0.0043% on Tuesday. The funding rate turning positive means that the bulls are firmly in control of the market.

CoinGlass’ long-to-short ratio for CHZ read 1.01 on Tuesday, after sitting in the red territory for over a week. 

Chiliz price forecast: The $0.051 resistance level remains a key challenge

The CHZ/USD 4-hour chart is bullish and efficient as Chiliz has outperformed the broader cryptocurrency market.

The cryptocurrency market is currently trading above key support levels thanks to its recent rally. The momentum indicators also suggest that the buyers could push CHZ’s price higher in the near term. 

The Relative Strength Index (RSI) at 58 shows that the bulls have regained control but still have more room for growth. 

The Moving Average Convergence Divergence (MACD) line has turned positive, with the histogram marginally above zero, hinting at a steady rally.

If the bullish scenario continues, the buyers would face immediate resistance at the recent swing high of $0.051. 

A daily candle close above this level would allow the bulls to extend the rally towards the $0.057 resistance and then the January high at $0.064.

However, if the sellers regain control, immediate support would emerge around the $0.047 Inducement Liquidity (ILQ). 

Failure to defend this support level would expose the other major zones around the $0.043 and $0.041.

Key takeaways

• PI is up by nearly 2% as bulls attempt to push the price above $0.1500.
• The ongoing token unlock could still put further pressure on the coin. 

Bulls look to push PI above $0.1500

Pi Network (PI) has been one of the worst performers among the leading cryptocurrencies in recent days. 

The coin is down 12% in the last seven days, underperforming compared to the broader crypto market. However, it has slightly bounced back after adding 2% to its value since Monday.

PI is now trading at $0.1507 on Tuesday, thanks to the outflows from Centralized Exchanges (CEXs). 

Despite that, PI could continue to face selling pressure as the mainnet migration surpasses CEX withdrawals.

Data obtained from PiScan reveals that 2.55 million PI tokens left exchanges over the last 24 hours, a figure that typically signals a surge in buying activity. 

While the outflow to CEXs will reduce selling pressure on PI, it is still not enough to absorb the migration tokens. 

Migration statistics reveal that 4.36 million PI tokens were transferred from testnet to mainnet on Tuesday, enabling holders to deposit this unlocked supply on CEXs. 

This latest development comes after 7.65 million PI tokens were migrated on the previous day.

Will the $0.1500 support level hold?

The PI/USD 4-hour chart remains bearish and efficient despite PI adding 2% to its value in the last 24 hours. 

The short-term recovery might not hold as the selling pressure is currently outweighing the demand. 

Momentum indicators reinforce this pressure, with the Relative Strength Index (RSI) hovering just above oversold territory near 34. 

PI’s Moving Average Convergence Divergence (MACD) line on the 4-hour chart also remains slightly negative below the zero line, adding further confluence to the bearish narrative. 

If the sellers continue to dominate, PI could drop below the $0.1500 and test the support levels at $0.1440 and $0.1345 in the near term. 

However, if the bulls regain control and push the price above the $0.1605 resistance level, it could allow PI to extend its rally towards the 100-period EMA at roughly $0.1684.