Kentucky Crypto ATM Bill Faces Criticism for Proposed Self-Custody Restrictions

ChainCatcher report: According to market sources, HB380, passed by the Kentucky House of Representatives, has added Amendment 33 near the end of its review process, 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 compel users to shift to centralized custodial services. This provision also contradicts HB701, passed by Kentucky in 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.