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Kentucky accused of attempting to compel crypto wallets to collect seed phrases., 2026/03/20 13:51:09
The Bitcoin Policy Institute (BPI) has criticized a bill that has been approved by the Kentucky House of Representatives. This legislation mandates hardware wallet manufacturers to enable users to recover passwords, PINs, and seed phrases.
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BPI argues that this is technically unfeasible without sharing data with third parties, such as the wallet manufacturer’s support team. Furthermore, this contradicts the fundamental principle of non-custodial wallets: even the manufacturers cannot access users’ private keys or seed phrases.
Experts from the institute assert that the bill could undermine the principle of self-custody of digital assets, which is a crucial component of the crypto ecosystem. They state that the ability to recover a seed phrase implies that it would effectively be stored not only by the user but also by the wallet manufacturer.
The bill is currently under consideration in the Kentucky Senate.
In Connecticut, regulators have temporarily halted the operations of cryptocurrency kiosks run by one of the largest American operators, Bitcoin Depot. The company has lost its money transfer license in the state, and its devices will no longer be able to operate.
