Kentucky Crypto ATM Bill Faces Criticism for Proposed 'Backdoor' Requirement

According to The Block, HB380, passed by the Kentucky House of Representatives, added an amendment at the final stage of deliberation requiring hardware wallet providers to offer users a mechanism to reset passwords, PINs, or recovery phrases. In response, the Bitcoin Policy Institute criticized this requirement as "technically impossible" for non-custodial wallets, since their design inherently ensures manufacturers cannot access or recover users’ private keys; mandating a backdoor would undermine Bitcoin’s core security safeguards and could force users toward centralized custodians. This provision also contradicts HB701, passed by Kentucky in March 2025, which explicitly protects users’ independent control over self-custodied wallets and private keys. HB380 has now been referred to the Senate for consideration, and lawmakers still have the opportunity to amend or remove this provision before the final vote.