Kentucky Crypto ATM Regulatory Bill's New Hardware Wallet Provisions Criticized for Allegedly "Banning User Self-Custody"

TechubNews · 2026-03-20T01:19:26+00:00

Kentucky House Bill HB380, which passed new amendments requiring hardware wallets to include reset mechanisms, has been criticized by the Bitcoin Policy Institute, which believes that this requirement is unfeasible for non-custodial wallets, could jeopardize security, and is contrary to HB701. The bill is currently under review in the Senate.

TechubNews

2026-03-20 01:19:26

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Techub News reports that the Kentucky House of Representatives passed HB380, which in its final review added a new Section 33 requiring hardware wallet providers to offer mechanisms for users to reset passwords, PINs, or recovery phrases. The Bitcoin Policy Institute criticized this requirement as “technically impossible to implement” for non-custodial wallets, since their design inherently prevents manufacturers from accessing or restoring users’ private keys. Forcing a backdoor would undermine Bitcoin’s core security and could push users toward centralized custodians.

Additionally, this provision conflicts with HB701, passed by Kentucky in March 2025, which explicitly protects users’ independent control over self-custody wallets and private keys. Currently, HB380 has been approved by the Kentucky House and is under review in the Senate. Lawmakers may still amend or remove this section before the final vote.

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