Kentucky crypto ATM bill adds hardware wallet clause critics say would ‘outlaw self-custody’
A Kentucky bill regulating crypto ATMs includes a clause that critics argue could effectively ban self-custody of cryptocurrencies.Summary
A bill in Kentucky, HB380, designed to regulate crypto ATMs, has sparked controversy due to a recently added amendment concerning hardware wallet providers. Section 33 of the bill requires these providers to assist users in resetting credentials like passwords and seed phrases, which critics, including the Bitcoin Policy Institute, argue is technologically impossible for non-custodial wallets and would compromise the security of Bitcoin. This requirement is seen as a potential 'backdoor' that undermines self-custody principles. The amendment clashes with Kentucky’s earlier stance supporting self-custody, as demonstrated by House Bill 701 enacted in March 2025. The bill has passed the House and is now under Senate consideration, where revisions are still possible. This debate occurs alongside increased scrutiny of crypto ATMs due to rising fraud concerns, as seen in Minnesota's proposal to ban them outright.
(Source：The Block)