NSS Weekly: What Do New Cryptocurrency Banking Laws Mean for You?

Transcript

[sound element: NSS intro theme]

INTRO: You are listening to North Star Stories: Voices from Where We Live, a weekly newscast about what it means to live in Minnesota, produced by AMPERS, Minnesota's community radio stations.

Victor Palomino: This is North Star Stories: Voices from Where We Live. Digital currencies have moved from a niche technology into mainstream dialogue. This year, Minnesota's lawmakers passed new legislation governing their use and allowing state-chartered banks and credit unions to offer cryptocurrency custody services.
This week, we take a look at what cryptocurrency is and what the new rules mean for customers and financial institutions. Then, we meet a group of students working to fill a gap in youth financial education. I'm Victor Palomino.

[NSS theme music ends]

Victor Palomino: But first, North Star Stories reporter Xan Holston with some of the news that made the headlines around the state.

Xan Holston: Health officials completed contact tracing in southeastern Minnesota for three new measles cases in Fillmore County, warning more cases could follow that outbreak as they issue a separate exposure warning. All three cases in Fillmore County were unvaccinated people. The first case, linked to travel, is the current primary cause of the disease spread. Now, the separate exposure warning involves an infected passenger on Amtrak's Empire Builder from Chicago to Minot, North Dakota, September 23rd, a route with six Minnesota stops. State health officials say there are currently more than 3,200 cases spreading in the U.S. and Minnesota is not immune.

JAYNE GRIFFITH/MINNESOTA DEPT. OF HEALTH EPIDEMIOLOGIST
If we just look at different outbreaks across the country, every day there's a new outbreak starting across the country. So we hope that that Minnesota will be spared, but we're on high alert.

Xan Holston: Initial measles symptoms are similar to a bad cold or flu, and being vaccinated is the only way to prevent the disease.

[sound element: NSS MUSIC TRANSITION]

ROCHESTER RESIDENT: Listen to the public. You do not have to accept the over budget bids later tonight.

Xan Holston: Despite residents' concerns about cost, Rochester City Council voted to replace the Silver Lake Dam. Rochester will begin work next week on a $19 million makeover of the dam, nearly $4 million more than last year's estimates. The redesign will replace the aging dam with rock rapids and cascading pools, reshape the shoreline and install supports for a pedestrian bridge.

[sound element: NSS MUSIC TRANSITION]

Xan Holston: Minnesota's ban on artificial intelligence and technology applications that turn real people's photos into fake nude images won't be enforced for now. A federal appeals court granted Elon Musk's XAI's legal request to temporarily block the law. Musk sued on claims the law violates free speech, Minnesota lawmakers describe the law as protection of people's freedom and privacy by making it illegal to create secret or unauthorized fake nude images of strangers, including children.

SEN. ERIN MAYE-QUADE: This is the bill that I hear about the law I hear about the most from Minnesotans. That is not the world we want to live in. This is technology that does not need to exist.

Xan Holston: The block remains in effect while the judge considers X AI's appeal.

[sound element: NSS MUSIC TRANSITION]

Xan Holston: A new memorial in the West Metro honors Gilbert, former House Speaker Melissa Hortman's family's golden retriever. The man who murdered Melissa Hortman and her husband Mark in June of last year also shot their dog. Gilbert's path is a walkway named in his honor, connecting a rainbow bridge to a pet memorial garden in Wayzata. Melissa Hortman helped train service dogs, including Gilbert, who became the family's pet after leaving the program.

[sound element: NSS MUSIC TRANSITION]

Xan Holston: And finally, it's full scream ahead in Duluth. The SS William A. Irvin has traded its freight for fright. Duluth's haunted ship is back for its 31st year, turning the historic 610-foot-long lake freighter into a floating graveyard. Tours run each weekend through Halloween, and for those scared of the dark, there's a new lights-on option Saturdays. For North Star Stories, I'm Xan Holston.

[sound element: NSS MUSIC TRANSITION]

Victor Palomino: Cryptocurrency is drawing attention in Minnesota, and prompting new rules for how it's handled. A new state law changes how customers exchange digital currency and lets some financial institutions offer custody services for digital wallets. Reporter Jose Ozoria looks at Minnesota's effort to protect consumers while making room for crypto in its financial institutions.

Jose Ozoria: Cryptocurrency is a digital or virtual form of money that uses cryptography for security and operates independently of central banks or governments. Cryptocurrency kiosks have existed in Minnesota for roughly a decade, significantly growing in scale over the years, until the state banned them entirely in August due to scammers using these kiosks to scam Minnesotans out of their money. At the same time as this ban, a new law allows banks and credit unions to safeguard customers' cryptocurrency,

Sarah Payne: Despite some of the strongest consumer protection laws that scammers were still using crypto kiosks at an astonishing rate to engage in scams and to defraud Minnesotans.

Jose Ozoria: Sarah Payne is assistant commissioner for enforcement at the Minnesota Department of Commerce. She says the state tried to make kiosk transactions safer before deciding to ban the machines outright, according to state legislators, the ban implemented in August addresses the ways scammers moved victims' money, but it does not ban cryptocurrency itself. Yet, to understand what Minnesota is allowing banks to hold, it helps to start with, how cryptocurrency works.

Alex Schoephoerster: The blockchain would be the underlying technology.

Jose Ozoria: That's Alex Schoephoerster, who sits on the board of Minnesota's Blockchain Initiative and the Minnesota Crypto Council.

Alex Schoephoerster: Essentially, think about it like a ledger, dating back for I don't know how many hundreds or even 1000s of years. We've had you know just a ledger of I owe you, you owe me. That's really what what that blockchain would be, cryptocurrency. Usually, we're talking about now some kind of coin or token or some element of value that is on top, built on top of that blockchain.

Jose Ozoria: To control that coin or token, an owner needs access to a digital wallet, often through a private key. People can manage that access themselves or use a company to hold it for them. Minnesota has now authorized banks and credit unions to offer that safekeeping service. Michael Crow, the Department of Commerce's deputy commissioner for financial institutions, says the new law

Michael Crow: only allows for custody. It does not allow for transactions to occur.

Jose Ozoria: A customer might buy crypto through an exchange and then move it to a participating bank or credit union, Crowe says. Currently, only a few institutions have notified the Department of Commerce of plans to explore custody.

Michael Crow: We anticipate it to be a very slow process.

Jose Ozoria: Banks and credit unions must notify the state before offering the service and prepare risk management and cybersecurity plans. Alex Schweister, with the Minnesota Blockchain Initiative and the Minnesota Crypto Council, sees value in giving customers another place to store an asset they may be uncomfortable holding on their own.

Alex Schoephoerster: There are definitely opportunities where now financial institution can hold these almost like a safe deposit box, where it's not on their balance sheet.

Jose Ozoria: But the resemblance to a bank product can be misleading. Michael Crow with the Minnesota Department of Commerce says a bank may safeguard someone's crypto, but

Michael Crow: what these products do not have is the the insurance that you typically see around your cash deposits, per se, whether it's FDIC insurance or NCUA insurance.

Jose Ozoria: FDIC insures bank deposits, while NCUA insures credit union deposits, and both provide government backing up to $250,000 per depositor per institution. While there is a risk with storing Bitcoin at financial institutions, it is vastly different from the risk faced with some kiosks. Sarah Payne says fraudsters used fear to guide victims through a cash-to-crypto transaction while staying on the phone.

Sarah Payne: Fraudsters often would walk victims through how to bypass on-screen warnings would talk them through splitting larger payments into smaller deposits in order to avoid daily limits on transactions.

Jose Ozoria: The state received more than 134 kiosk-related complaints from 2023 through 2025, involving nearly $1 million in reported losses. Kiosks have been required to stay offline since August 1st and must be removed from public spaces by December 31st. Licensed online exchanges can still operate. Alex Shapoyster with the Minnesota Blockchain Initiative and Minnesota Crypto Council recognizes the fraud problem, but says the ban also removes a way for people with physical cash to enter the crypto market. He questions what replaces it, especially for people without easy access to banking.

Alex Schoephoerster: If we're talking physical cash, how are we going to convert that into Bitcoin? And unless it's a you know one-off case-by-case basis, you're just going to transact someone in person, right? And you give me $100, and I'll transfer you $100 in Bitcoin. Kiosks were a way that people could do that.

Jose Ozoria: That concern is about access. Sarah Payne says the state weigheded against the harm it was seeing through the machines. She views the kiosk ban and the new custody laws as connected decisions.

Sarah Payne: We see them as being hand in hand, sensible regulations that allow Minnesotans to engage in the sale, the purchase, and the holding of cryptocurrency assets.

Jose Ozoria: For now, the new bank service is permitted, but still rare. Anyone considering it would need to ask what it costs and how the. Institution protects the asset, and whether it offers any insurance beyond ordinary deposit coverage for someone receiving an urgent demand to send crypto. Payne's advice is simpler.

Sarah Payne: Stop number two, verify, and then three, report.

Jose Ozoria: Minnesota has shut down one way to turn cash into crypto while opening a supervised way to hold it. The next test is whether banks offer that service and whether customers understand exactly what protections it provides. For North Star Stories, I'm Jose Ozoria.

[sound element: NSS MUSIC TRANSITION]

Victor Palomino: Minnesota now allows state-chartered banks and credit unions to offer cryptocurrency custody, safekeeping customers' digital assets or private keys. To understand more about this new law, we are joined now by Michael Crow, who oversees the Financial Institutions Division at the Minnesota Commerce Department. He is responsible for the Department's regulation of state-chartered banks and credit unions, as well as non-bank financial institutions licensed in Minnesota.

Michael, thank you for coming to North Star Stories.

Michael Crow: Of course, glad to be here.

Victor Palomino: We heard about how the state is going to give banks and credit unions opportunity to work with crypto and something that is called crypto custody. How did you find that, and what that means for the regular person that is just used to traditional banking?

Michael Crow: Crypto custody came to us primarily through the industry, by the credit union industry in particular. They talked to us and said, "Hey, the financial services space is changing. They said there's a need here. Our members have the need. Our institutions have the need. It needs to be addressed. We would like to take a look at our law and find ways that we can start to move into the sense of cryptocurrency, and that's where the custody comes from. Because custody is something that the depository institutions throughout the state and nation are very familiar with. That they do this in the traditional finance world of finance, but in the crypto side, that's kind of like that first step stone that you would move forward with is that custody. So that's how it came to our table. That's how it came to our desk. We consider that a fairly low risk the way it's proposed in terms of cryptocurrency. So we decided to make the effort to work with the industry and and find common ground there.

Victor Palomino: When people think about crypto and this new currency, there's a lot of questions about that, about how secure it is, how the the changes of the currency are going to be managed. So, what are we talking about there?

Michael Crow: Yeah. So when when I say low risk, really what I'm doing, I'm comparing the risk of holding the cryptocurrency versus actively trading the currency, or actually moving that currency cross border. What we're talking about custody is the financial institution. If we think of a wallet, almost hosting a wallet for somebody, they're not conducting the transactions like say if they wanted to sell their Bitcoin and buy Ethereum. They're only holding it. So what that would mean, or what that would look like, is if I were a member of a credit union or a customer of a bank, I would conduct my transactions off. I'll use Coinbase and PayPal as an example. But if I wanted to maintain my accounts, maintain my cryptocurrency, I would do so through the wallet platform that's that's offered by my institution, my depository, and part of what makes that secure is that banks and credit unions operate under very scrutinized IT infrastructure. They're they're highly regulated. They have systems that cannot just stop working. They have to always work. So bringing it within that realm kind of it lowers that risk to a degree. And again, it's only facilitating a wallet, the the custody of the asset, not the actual transaction of moving over overseas or whatnot.

Victor Palomino: And do you think this is going to be more for business owners and institutions than for like a regular person doing their banking.

Michael Crow: We're very early. Could I see a world where we're operating in blockchain, possibly, in the financial sense? Yeah, certainly. Because if we think about it, consumers don't come to the table and ask, you know, I want to make sure you're moving my money through ACH, right? All they're asking is, I want to make sure you're moving my money and that it's settled, that it's done fairly, and it's done legally, and I have access to my money. So if a consumer is coming and say, you know, every time I move money, it takes two business days to settle that transaction, but I'm hearing about this other technology, where it's instantaneous and it's supported by regulated institution, why aren't we moving to that? So I think you're going to see that shift on the business side, at least on the back end. I think there's a cost benefit to a lot of institutions in the sense that current financial money systems. Rails, as we call them, they can be fairly expensive, and for good reason because there's compliance checks in there. But on the blockchain side, some of that cost does come down, so we also recognize that there is a cost factor in there for if a bank or credit union wanted to offer that. And a lot of times, they may pass that cost savings down to their members or customers.

Victor Palomino: Well, Michael, thanks again.

Michael Crow: Thank you for having me.

[sound element: NSS MUSIC TRANSITION]

Victor Palomino: After the break, we continue the conversation on cryptocurrency and how a group of high school students is introducing financial literacy in the twin cities and worldwide. This is North Star Stories: Voices from where we live, produced by AMPERS, Minnesota's community radio stations, with support from the state of Minnesota. We'll be right back.

[sound element: NSS Break Music]

[NSS Promo: "North Star Stories is produced by AMPERS, Minnesota's Community Radio Stations. Check out our other programs at AMPERS dot ORG: Minnesota Native News brings you weekly coverage of the state's Native American communities. MN90 - Minnesota History in 90 Seconds - transports you to historical moments in our state through short, engaging stories. Native Lights: Where Indigenous Voices Shine is a weekly podcast featuring conversations between Mille Lacs Band of Ojibwe members and siblings, Leah Lemm and Cole Premo, and Native community members. Hear more at AMPERS dot ORG."]

[NSS Break Music ends]

Victor Palomino: You are listening to North Star Stories. I'm Victor Paromino. We continue the conversation on cryptocurrency with Professor Jiang Zhang, an assistant professor of finance at the Opus College of Business of the University of St. Thomas in the Twin Cities. His research study cryptocurrencies and decentralized finance. Thank you for coming to North Star Stories.

Professor Jiang Zhang: Yeah, thank you for having me here.

Victor Palomino: Cryptocurrency. Do you think this is going to become more common?

Professor Jiang Zhang: First of all, when we talk about cryptocurrencies, it's it's not a single asset, right? It's a broad group of different technologies and different cryptocurrencies. So, and different investors use different cryptocurrencies for different reasons. So, for example, if we compare Bitcoin and stablecoins, their price, their designs are completely different. If you invest in Bitcoin, then there's going to be very high volatility if you invest in stable coins, which are designed to track a traditional currency like U.S. dollars. It'sgoing to be much more stable. So yeah, so some and some investors buy cryptocurrencies to speculate. They want to take advantage of price fluctuations, some people use cryptocurrencies for payments, right? So cryptocurrency, because they get around the traditional financial system, in theory they can provide sometimes faster transactions and sometimes easier transactions Across borders, how practical those goals are is another question. But at least with that intention, some people use them to for payment reasons.

Victor Palomino: What is the difference between these cryptocurrencies and the things that you can put in the bank, and then all these coins that come out, and and and and people are kind of like buying us at a one-time investment.

Professor Jiang Zhang: To answer that, we need to talk a bit more about how blockchains work. So, for example, the the Bitcoin cryptocurrency was one of the most established one, and then we had another big one that's called Ethereum, and one of Ethereum's innovation was that their blockchain allow for executions of what we call smart contracts. So you can create your own digital assets and platforms that trade those assets. And most of the well-known stable coins or even NFTs, non-fungible tokens, they live on the Ethereum blockchain. You can use your wallet to store access to not just Ethereum, but all those tokens or or stable coins or NFTs on that blockchain. So yeah, so and that wallet would be the thing that you would want, for example, a credit union to help you manage for safety reasons.

Victor Palomino: If somebody has been doing banking traditionally, they should be thinking about this, or they just can just leave it on the side, let other people deal with that, and and then don't worry about cryptocurrency.

Professor Jiang Zhang: I had the same question 10 years ago when I was in grad school because I started my finance research career by doing research in the traditional financial market structure, so I study how we can improve the stock market, how we can make the options market more efficient, and then there comes cryptocurrencies that emerge very quickly. About 10 years ago, so I always tell my students. Now looking back, I tell my undergraduate students, you can have your own investment thesis regarding whether you want to invest in cryptocurrencies, not just with your own money, but also with with your customers of money. Let's say you are managing a mutual fund, right? But no matter what, you should still know a lot about this because even if you are don't believe in investing in cryptocurrencies, there's a high chance your customers, your clients will reach out to you asking they had a friend who earned a 20% profit last year on cryptocurrencies. Why are you not investing in those? So, yeah, and again, like I said previously, we've moved away from the area where we ask whether this thing actually will work, over to everybody just talking about regulation, and because we assume that there will be at this point, conservatively speaking, at least 10 to 20% of population who have been investing in this, or who are gonna be interested?

Victor Palomino: Thank you so much for your insights and and for having this conversation.

Professor Jiang Zhang: Been a pleasure. Thank you.

[sound element: NSS MUSIC TRANSITION]

Victor Palomino: As digital currencies and wallets change how people manage money, financial education remains essential. In the Twin Cities, a group of students at East Ridge High School created Spendora to help their peers learn the basics of personal finance through free workshops. Today, they offer classes online and have reached out to students in India and Nigeria. We are joined now by Mujeeb Chaudhry and Harshad Amalan. Together with Neil Kaila, they founded Spendora. Thank you for coming to North Star Stories.

Mujeeb Chaudhry: Thank you so much.

Victor Palomino: Let's start with this idea of financial education. Where did the idea come from?

Mujeeb Chaudhry: So Mujib, first, I realize schools, like they teach a lot of things, right? Obviously, they teach all these English, math, anything like that. But they always skip the money skills in life. You know, the main thing that people need to be knowing about, they always skip it. And you've seen this how kids are saying like, "Oh, I don't know how to do taxes. I'm already 18. Like, what is happening? And we've seen this with many, many people. And Harshad, Neil, we come together and we're just like, okay, we are heavily invested into this. We love doing this, so let's just teach finance to the youth. You know, as we want to learn more and we want to teach exactly what we learn to them. And the main thing that we love to see is how the student to student peer like peer group really just works out.

Victor Palomino: What have you learned, and what do you think schools can learn from what you are doing?

Mujeeb Chaudhry: If you've seen the Minnesota curriculum, um, as of 2027, schools offered a new class called personal finance. Okay, so there's already microeconomics and macroeconomics, which were pretty basic. They're like 2015 topics about old economics. We teach the new topics that you know. Obviously, finance is moving fast, and they literally schools have learned from us. All these students wanting to know about finance and built their own class about personal finance, and we've been teaching it since 2024. Yeah, pushing that forward to students, and finally, it's getting to a point where personal finance is going to be abroad.

Harshad Amalan: Harshad speaking now. Last year, for example, my junior year, for example, at Eastridge High School specifically, there was no required class to graduate what was a finance credit. But this year, when I'm a senior, there is. The only reason we started Spendora is because there was no credit in the first place. But now there is a credit, and like as time went on, like schools understood that because they saw individuals actually coming to our meeting and saying, "Oh wow, this like financial literacy organization named Spendora is teaching a gap that my school does not cover. So taking that into account, that's why they made a personal finance credit this year in order to graduate.

Victor Palomino: How do you get people from India to participate in your in your programs,

Mujeeb Chaudhry: me myself, Harshad, and Neil Kaila were both Indian, different regions. Neil is North Indian, while Harshad is South Indian. And what we did is we just reached to a lot of these schools in India, literally just cold emailing principals and institutions, and literally every single one ended up replying. But on our website, you can you can see it's three successful partnerships with pilot programs in India right now, and I think a successful thing. And they look, we have good connection with these schools now. They ask us for videos, and we would just send those videos towards them. And we did the same thing with an app in Nigeria. Funny, ironically, the app is also called Spendora, the same name that we have, but it's not an LLC. It's just like an app to three adults to run in Nigeria, Lago specifically the capital, and we Mujib Chaudhary emailed them and said, "Do you guys want to partner? And me and Harshad Umle and Mujib Chaudhry, we ended up going on a call with these individuals Nigeria. We ended up like partnering with this app.

Mujeeb Chaudhry: You can visit them on our website now. The main thing is we loved finance, and we knew people, and we knew people who loved finance as well. And through referrals, where you tell one person, the other person tells another person, and then it keeps on going, it gets bigger and bigger. And through videos on our Instagram, which is at Spendora dot live on Instagram, we posted reels, and you know people made fun of us. Okay, like why why you posting reels? But a lot of people really loved informational videos because these were niche topics that we were like, oh man, I I didn't know I wanted to know that, but I really did. And then through that they hooked up to our next workshop. So through these videos that we posted and through referrals, we this organic growth was local. The whole thing is just free. It's adaptable content, and we wanted to make it reach farther than we ever wanted to before. Where organizations and anybody can just serve students, and we wanted to bring it from a Minnesota project into something students internationally anyone could just understand and use. Because finance just needs to be free and understandable in such an easy way.

Victor Palomino: How do you see yourself in the future?

Mujeeb Chaudhry: So this is Mujib's talking. So I feel like everyone listening to this is gonna be like, oh my god, these kids just want to use this on their college application and move on with their life. But we love this super deeply, and the main thing I really wanted to do with this as when we grew older, is just like how I talked about courses and all that stuff. People paying for all this financial stuff that should be free. We wanted to bring, like for example, like a public Google, like hub, Google Drive, where anyone, any student, any personal finance class, anybody can just check it out, um, pick out any content they want from any niche content, like because finance can go from so many different branches, so they can pick out exactly what they want. They can build, you know, they can upload their own stuff, or they can pick out what they want and easily just learn from anything completely free. We want to build that and bring this branch out to a bunch of other schools to bring forward this initiative.

Harshad Amalan: We genuinely found a gap in our community, and we truly want to fulfill that gap, and the idea is that how we how do we see Spendora in the years is, I mean after me, Neil, and Mujib graduate, we will go to like a university or a college, and the idea is we're still we're we still want to like advise Spendora at these colleges because it is it is truly good for our community to actually not just our community but any community we're in to spend to just give free financial knowledge and it won't hurt anyone it'll only help people it doesn't just end high school high school just a launch pad

Victor Palomino: Mujib and Harshad thank you so much for your time for sharing this information with our listeners and good luck with this project feels like it's something that the community needs, and you enjoy doing. So thank you for your time.

Harshad Amalan: Thank you.

Mujeeb Chaudhry: Yeah, thank you so much.

[sound element: NSS outro theme]

Victor Palomino: This is it for today's program. If you miss any part of today's newscast, you can find these and past episodes at ampers.org, or listen wherever you get your podcast. You can also get North Star Stories Daily on our website or check your favorite station schedule. Thank you for listening, and we'll be back next week with more stories and voices from the North Star State.

OUTRO: North Star Stories is produced by AMPERS, Minnesota's community radio stations with support from the state of Minnesota. Online at ampers.org.