Kentucky Gov. Andy Beashear yesterday signed House Bill 701, which offers greater protections for users who self-custody their Bitcoin and cryptocurrency.
To self-custody Bitcoin or another cryptocurrency means that a user has full control over the private key needed to authorize transactions. It’s more like having cash in a wallet than using a debit card to authorize your bank to send someone money.
Users who prefer that freedom also carry sole responsibility for protecting their holdings. A man in Wales has spent 12 years trying to get permission to excavate a landfill to retrieve a hard drive containing 8,000 Bitcoin worth $696 million at today’s price.
But if that’s the risk users are willing to take, the state of Kentucky wants to protect their rights.
Crucially, the new law received unanimous support at 91-0 in the House during a vote on Feb. 28 and again in the Senate on March 13 with 37-0, before being approved by the governor.
This new law will guarantee the rights of individuals to hold and manage cryptocurrencies in their self-hosted wallets. This should mean those in Kentucky can gain total control over their cryptocurrency, without any issues of interference.
As such, this means local governments will not be able to enact discriminatory laws that unfairly target crypto mining.
The law also clarifies that neither mining nor staking rewards are classified as securities. And operating blockchain nodes and staking will be exempt from Kentucky’s money transmitter regulations.
Kentucky is also reviewing House Bill 376, which proposes the creation of a crypto reserve for the state. This would allow investment of up to 10% of excess state reserves into digital assets with a market cap of $750 billion.
Other states considering Bitcoin reserves
This new Kentucky law comes as a growing number of states are moving towards greater embrace of cryptocurrency.
A third of states are currently exploring crypto for public funds, with 19 states in ongoing legislative considerations.
Notably Utah passed a bill, on January 28, that will authorize the state treasurer to allocate up to 5% of certain public funds to “qualifying digital assets.” This is as long as they meet the main requirement of having over $500 billion in market capitalization, averaged over the past 12 months.
New Mexico is another example of Bitcoin support with Senator Anthony L. Thornton introducing the Strategic Bitcoin Reserve Act (SB275) on February 4, proposing a 5% allocation of public funds to Bitcoin.
At time of publishing there are 16 states actively being tracked by the Bitcoin Reserve Monitor.
It’s worth noting that while there is interest here, most are capped at 10%, and there are still the majority of states that are not looking into crypto at this stage.
And some states—like Montana, North Dakota, Wyoming, and Pennsylvania—have already rejected the efforts to convert tax dollars into Bitcoin.
Edited by Stacy Elliott.
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