Minnesota legalizes bitcoin custody services for banks, credit unions

[Oshosondy]

Cryptocurrencies was on the bill signed by Governor Tim Walz, not only bitcoin. The new law authorizes banks and credit unions to provide virtual-currency custody services in a nonfiduciary capacity from Aug. 1.

https://cointelegraph.com/news/minnesota-crypto-custody-services-banks-credit-unions-law

More states in the United States will probably do the same, also more countries.

Some people will say this is not how bitcoin is intended to be, that there should not be a central body before you can transfer your bitcoin to another person. Yes, that is true, but you always have the P2P option by using the noncustodial wallet.

[hugeblack]

The question is, will users be able to withdraw Bitcoin from these wallets?

Compared to TrustWallet, Exodus Wallet, and other closed-source wallets, these might be a better option (although I recommend well-reviewed open-source wallets or hardware wallets).

[toryn388]

Custody services are fine as long as people remember they’re optional, not the whole point of Bitcoin.

[MinoRaiola]

Some people will say this is not how bitcoin is intended to be, that there should not be a central body before you can transfer your bitcoin to another person. Yes, that is true, but you always have the P2P option by using the noncustodial wallet.

Thats right, if you can, you should manage your Bitcoin yourself. No one else should have access to it, or maybe someone in your family. However, if doing so offers an advantags to getting a loan and paying lower interest rates, then it maybe better. This can reduce the securityrisk and help you save money in the long run. You can still withdraw your coins after signing agreement  It is not bad, but they should only do if it gives an advantage.

[Oshosondy]

The question is, will users be able to withdraw Bitcoin from these wallets?

I do not see it as wallet, I see it has banks helping their customers to save their bitcoin and other crypto assets that they support. Yes, the customers will be able to withdraw their coins. There have been some banks that are going this. I have a friend in UK (not US) that buy bitcoin this way and have it in the bank some years ago.

Custody services are fine as long as people remember they’re optional, not the whole point of Bitcoin.

You are right, but some people do not have the knowledge about exchanges and noncustodial wallets, this will be an option for such a people if they can not go for ETF.

I prefer the noncustodial way, but this might make some people buy bitcoin.

[hugeblack]

I do not see it as wallet, I see it has banks helping their customers to save their bitcoin and other crypto assets that they support. Yes, the customers will be able to withdraw their coins. There have been some banks that are going this. I have a friend in UK (not US) that buy bitcoin this way and have it in the bank some years ago

If they give users the opportunity to extract the private key, then they are a wallet, whether the user is the only one who can access the private key, or they access an encrypted copy of it, or as part of a multi-signature wallet setup.

[bitmover]

The question is, will users be able to withdraw Bitcoin from these wallets?

I do not see it as wallet, I see it has banks helping their customers to save their bitcoin and other crypto assets that they support. Yes, the customers will be able to withdraw their coins. There have been some banks that are going this. I have a friend in UK (not US) that buy bitcoin this way and have it in the bank some years ago.

In Brazil I believe 90% (or more) of banks allows you to buy and sell bitcoin. Even the biggest banks.

But basically none of them allow you to withdrawal. You can buy and sell and pay taxes, but no withdrawal, no p2p selling, etc.

I think that even with such limitations, the bitcoin support is positive and good for bitcoin. People feel more confident about buying bitcoin in a bank, and they can also become more interested about it and google about it. They will quickly find information about wallet, custodial services, etc and they can decide to buy somewhere else and make their own custody or not.

[Synchronice]

The question is, will users be able to withdraw Bitcoin from these wallets?

I do not see it as wallet, I see it has banks helping their customers to save their bitcoin and other crypto assets that they support. Yes, the customers will be able to withdraw their coins. There have been some banks that are going this. I have a friend in UK (not US) that buy bitcoin this way and have it in the bank some years ago.

Custody services are fine as long as people remember they’re optional, not the whole point of Bitcoin.

You are right, but some people do not have the knowledge about exchanges and noncustodial wallets, this will be an option for such a people if they can not go for ETF.

I prefer the noncustodial way, but this might make some people buy bitcoin.

It basically means that banks will be able to safeguard, control and manage private keys on behalf of customers. Logically, this gives banks the possibility to offer crypto withdrawal as an option to the users but it doesn't mean they'll 100% do it. They still can disable crypto withdrawals if they want.

By the way, since this article says that banks may hold crypto in a custodial capacity, I expect customers to retain ownership of their coins.

I predict that this will slowly spread like a virus and soon lots of states and countries will offer similar service to customers, which means that crypto's market cap will significantly increase.

[Oshosondy]

But basically none of them allow you to withdrawal. You can buy and sell and pay taxes, but no withdrawal, no p2p selling, etc.

It basically means that banks will be able to safeguard, control and manage private keys on behalf of customers. Logically, this gives banks the possibility to offer crypto withdrawal as an option to the users but it doesn't mean they'll 100% do it. They still can disable crypto withdrawals if they want.

This is true, it is deposit or have fiat in the bank, convert it or part of it to bitcoin or other coins the bank is listed, convert the coin back to fiat anytime you want. This is what I an trying to say, but the way I said it is truly completely wrong as it is not a direct crypto withdrawal like on exchanges.

[AmoreJaz]

The question is, will users be able to withdraw Bitcoin from these wallets?

I do not see it as wallet, I see it has banks helping their customers to save their bitcoin and other crypto assets that they support. Yes, the customers will be able to withdraw their coins. There have been some banks that are going this. I have a friend in UK (not US) that buy bitcoin this way and have it in the bank some years ago.

In Brazil I believe 90% (or more) of banks allows you to buy and sell bitcoin. Even the biggest banks.

But basically none of them allow you to withdrawal. You can buy and sell and pay taxes, but no withdrawal, no p2p selling, etc.

I think that even with such limitations, the bitcoin support is positive and good for bitcoin. People feel more confident about buying bitcoin in a bank, and they can also become more interested about it and google about it. They will quickly find information about wallet, custodial services, etc and they can decide to buy somewhere else and make their own custody or not.

Any activity which utilize the use of btc can be considered as adoption. It may not have the usual financial transaction but once btc is in between or involved in the system, somehow, you are already promoting the use of this digital currency.

[Z-tight]

I do not know how to react to this news, but as i like to say, i do not get to tell people what they would do with their coins. Their keys, their coins. Would i use this banking service if it was offered in my state? Of course i would not. But people store their coins in different third party services, so i am sure many people wouldn't mind using this service and it may even offer them better security.

[sokani]

It basically means that banks will be able to safeguard, control and manage private keys on behalf of customers.

Sure... the bank will have custody of funds, but that does not mean they will have custody of the private keys. My guess is that subscribers will transfer their assets to a wallet owned by the bank. The banks will have a record of users as well as the amount of coins they owned.

Logically, this gives banks the possibility to offer crypto withdrawal as an option to the users but it doesn't mean they'll 100% do it. They still can disable crypto withdrawals if they want.

Or they may disable it and enable withdrawal in fiat. That's users seeking withdrawals will receive the fiat equivalent of their coins. I think it is most likely what most of the banks would do.

[Cryptomultiplier]

Cryptocurrencies was on the bill signed by Governor Tim Walz, not only bitcoin. The new law authorizes banks and credit unions to provide virtual-currency custody services in a nonfiduciary capacity from Aug. 1.

https://cointelegraph.com/news/minnesota-crypto-custody-services-banks-credit-unions-law

More states in the United States will probably do the same, also more countries.

Some people will say this is not how bitcoin is intended to be, that there should not be a central body before you can transfer your bitcoin to another person. Yes, that is true, but you always have the P2P option by using the noncustodial wallet.

I believe strongly that it is even because the U.S accepted cryptocurrency and even own a reserve for it, that suddenly made the citizens see light there and want to also own some of it or even transact with it. The U.S is also a leader in the world and may have also influenced some countries to accept it too.
Although this contravene the true ethos of Bitcoin, being decentralized and permissionless, it somehow have created alternate system which allows for its use by different people who were not convinced or understood what the decentralized systems was, maybe because they are too pious or follow the laws in total and fear prosecution.

The oldies would have no problem alternating between the centralized and decentralized technology because of their original knowledge, it is only those who came onboard newly because of the official acceptance, that gets limited in a way from the decentralized systems.

[Dr.Bitcoin_Strange]

Well, even if I lived in that region, as someone who has been this exposed to bitcoin, I can not use bank service to buy, sell and hold bitcoin no matter how good the service is, I can't use it to hold my coins while there are non custodial wallets that I can use for that and there are also some cex that can allow me buy and withdraw bitcoin without asking for KYC and there are still means for me to do normal  face to face p2p. Except I'm completely limited from all those other options before I can bend to this.