Minnesota financial institutions can no longer afford to remain on the sidelines as Wall Street aggressively captures digital asset infrastructure, driving a state-level legislative push to halt deposit flight and insulate the local economy, a local legislator and a banker told CoinDesk.

“Over the last several years, I’ve consistently heard concerns about the increasing amount of deposit flight from local financial institutions to crypto exchanges and digital asset platforms,” said Rep. Bernadette “Bernie” Perryman (R-St. Augusta).

The lawmaker, who authored the bill recently enacted by Governor Tim Walz, paving the runway for state banks and credit unions to provide crypto custody service, explained that deposit flight has…