Kentucky enacts law supporting self-custody of cryptocurrencies

Kentucky Governor Andy Beshear signed House Bill 701 (HB 701) into law on Monday, establishing protections for bitcoin and cryptocurrency use within the state.

The legislation received unanimous bipartisan support in both chambers of the Kentucky legislature, passing the House 91-0 on Feb. 28 and the Senate 37-0 on Mar. 13 before landing on the governor’s desk for final approval.

HB 701 , titled "An Act relating to blockchain digital assets," introduces several key provisions to foster a crypto-friendly environment in Kentucky.

The law guarantees individuals the right to hold and manage their crypto in self-hosted wallets, enabling Kentuckians to maintain complete control over their cryptocurrency without interference.

It prohibits local governments from enacting discriminatory laws that unfairly target crypto mining operations and clarifies that mining and staking services are not classified as securities under Kentucky law.

Furthermore, operating blockchain nodes and engaging in staking activities are explicitly exempted from Kentucky's money transmitter regulations.

This aligns with a broader trend among U.S. states to embrace crypto amid growing institutional and retail adoption. Utah recently enacted a similar law, integrating crypto into the state's legal framework and supporting citizens' engagement with crypto and blockchain activities.

Meanwhile, Kentucky is reviewing a separate proposal, House Bill 376 (KY HB376), which proposes creating a crypto reserve for the state. House Bill 376 aims to allow the State Investment Commission to invest up to 10% of excess state reserves into digital assets with a market cap of over $750 billion (effectively bitcoin). However, it has not yet become law and is still undergoing deliberation.

The legislative journey in Kentucky requires a bill to be passed by both the House and Senate and then signed by the governor. HB376, which proposes a bitcoin reserve, remains to be voted on by the House.