Kentucky Enacts Law Protecting Self-Custody of Cryptocurrency and Considers Crypto Reserve

Kentucky has enacted a law protecting the right of individuals to self-custody cryptocurrency, ensuring users retain full control over their digital assets. The law, passed unanimously in the House on February 28 (91-0) and in the Senate on March 13 (37-0), prevents local governments from enacting discriminatory laws targeting crypto mining and clarifies that mining and staking rewards are not securities. Furthermore, operating blockchain nodes and staking are exempt from money transmitter regulations. Kentucky is also considering House Bill 376, which could allow investing up to 10% of excess state reserves into digital assets with a market cap of $750 billion. This move aligns Kentucky with a growing number of states exploring cryptocurrency, with a third currently considering crypto for public funds and 19 states in ongoing legislative discussions. Utah, for example, passed a bill on January 28 authorizing the state treasurer to allocate up to 5% of certain public funds to qualifying digital assets, provided they have a market capitalization exceeding $500 billion. New Mexico introduced a similar bill on February 4, proposing a 5% allocation to Bitcoin.