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Minnesota has become the latest U.S. state to legalise crypto custody for banks and credit unions, a move that comes as Iran’s main oil export terminal, Kharg Island, stays shut under a U.S. naval blockade. The new law, effective August 1, follows reports from Iranian state media that Washington may temporarily lift oil sanctions and unfreeze some Iranian funds, though U.S. officials have denied any agreement.

Background

In recent months, U.S. policy toward Iran has swung between tightening sanctions and exploring diplomatic relief. The Biden administration has announced new sanctions on Iranian oil in late April and early May 2025, while Iranian state‑linked outlets claim a temporary waiver of oil export restrictions and a phased unfreeze of roughly 25 % of blocked Iranian assets. Meanwhile, the U.S. Navy has imposed a blockade that has kept Kharg Island, Iran’s primary crude export terminal, from loading any ocean‑going tankers since May 8, affecting an estimated 69 million barrels of crude. On the domestic front, Minnesota’s legislature has enacted a comprehensive framework for regulated crypto custody, positioning the state as a pioneer in the Midwest and the first to provide a unified legal structure for both banks and credit unions.

What Happened

On Monday, Governor Tim Walz signed virtual‑currency law HF 3709, authorizing state‑chartered banks to offer fiduciary or non‑fiduciary crypto custody services and credit unions to operate in a custodial non‑fiduciary capacity. The law defines custody as the safekeeping, controlling or managing of digital assets or their cryptographic private keys, and requires institutions to keep customer holdings separate from their own assets. Before launching services, banks and credit unions must submit a 60‑day advance written notice to the Minnesota Commissioner of Commerce detailing risk‑management and cybersecurity frameworks. The law coincides with a statewide ban on crypto ATMs and kiosks, effective August 1, enacted through bipartisan bill SF 3868. The ban targets kiosks that have been used for scams, especially against seniors. CoinDesk reports that the legislation is seen as a “major milestone” by state representatives, including Steve Elkins, who highlighted the loss of crypto accounts due to lost passwords. The St. cloud Financial Credit Union praised the law for providing “safer, more trusted options” within a regulated environment. Meanwhile, Iranian state media reported that Washington has agreed to temporarily lift sanctions on Iranian oil exports and may unfreeze about 25 % of Iranian funds on a phased schedule. No U.S. officials have confirmed these claims. In contrast, the U.S. State Department has continued to announce new sanctions against Iran’s oil trade. Satellite imagery from Bloomberg shows Kharg Island has not loaded a single ocean‑going tanker for at least ten days, with an oil slick of approximately 71 km² and an estimated 80,000 barrels leaked into surrounding waters. The U.S. Navy has engaged Iranian tankers attempting to breach the blockade, and the blockade has impacted roughly 69 million barrels of crude in nine days.

Market & Industry Implications

  • For Minnesota’s financial sector, the law creates a regulated pathway for banks and credit unions to diversify services, potentially attracting new customers seeking crypto custody under state oversight.
  • The requirement for a 60‑day notice and separate custody of customer assets may increase operational costs but also enhances consumer protection and cybersecurity compliance.
  • The concurrent ban on crypto ATMs may reduce illicit activity but could also push consumers toward regulated custodial services, aligning with the new law’s objectives.
  • On the global stage, the unverified U.S. sanctions waiver could, if realized, increase the supply of Iranian crude on the world market, exerting downward pressure on oil prices. However, the continued blockade of Kharg Island and new sanctions announced by the U.S. State Department suggest that any temporary relief has not yet materialised in policy changes.
  • The lack of observable policy shift and the ongoing blockade may keep Iranian oil exports constrained, limiting the impact of any potential sanctions pause on global oil supply.

What to Watch

  • August 1: Minnesota’s crypto custody law becomes effective; banks and credit unions will begin submitting their 60‑day advance notices.
  • Mid‑2025: Potential U.S. State Department statements confirming or denying the alleged temporary sanctions waiver on Iranian oil.
  • Future U.S. sanctions announcements: Monitor for any new sanctions or relief measures that could alter the status of Iranian oil exports.
  • Satellite imagery releases: Continued monitoring of Kharg Island activity and oil slicks to gauge the blockade’s effectiveness.