Kentucky faces criticism for a proposed crypto bill amendment that could effectively ban self-custody wallets. The Bitcoin Policy Institute warns the measure, embedded in HB 380, would require hardware wallet providers to reset user seed phrases, a mandate it calls technologically impossible. Meanwhile, a race for state-level strategic Bitcoin reserves continues, with seven U.S. states having approved such frameworks.
A proposed Kentucky bill amendment is drawing scrutiny for potentially outlawing self-custody of cryptocurrencies. The research group Bitcoin Policy Institute stated that an amendment to HB 380 would require hardware wallet makers to reset users’ seed phrases on request.
“This would effectively outlaw self-custody in Kentucky,” the group noted. The amendment is part of broader legislation aimed at regulating virtual currency kiosks and was added in January.
The advocacy group argues the requirement is unworkable for non-custodial wallets. “The mandate is technologically impossible for non-custodial wallets,” the BPI wrote, adding that it breaks fundamental security guarantees.
It has formally communicated these concerns to the Kentucky Senate. The group urged legislators to protect constituents’ right to secure their property.
Separately, a handful of U.S. states have moved to establish strategic Bitcoin reserves. As of 2026, only seven states have approved such a framework, including Arizona and Texas.
At the federal level, the United States government is a major holder of Bitcoin. It currently holds approximately 328,272 BTC, representing about 1.5% of the total supply.
This makes the U.S. the largest government holder globally. China and the United Kingdom hold roughly 190,000 BTC and 61,245 BTC, respectively.
