A last-minute amendment buried in Kentucky HB 380 would require hardware wallet providers to reset users' seed phrases on request, effectively outlawing self-custody in the state.
The mandate is technologically impossible. Hardware wallets are designed so that no one, including the manufacturer, can access or recover a user's seed phrase. Compliance would require building a backdoor that breaks Bitcoin's core security guarantees and pushes users toward centralized custodians vulnerable to hacks and failure.
Section 33 was slipped into a 77-page virtual currency kiosk bill. The underlying bill has political support and could pass the Senate within the week. BPI is sending a letter to the Kentucky Senate urging them to strip this provision before it reaches a vote.
The mandate is technologically impossible. Hardware wallets are designed so that no one, including the manufacturer, can access or recover a user's seed phrase. Compliance would require building a backdoor that breaks Bitcoin's core security guarantees and pushes users toward centralized custodians vulnerable to hacks and failure.
Section 33 was slipped into a 77-page virtual currency kiosk bill. The underlying bill has political support and could pass the Senate within the week. BPI is sending a letter to the Kentucky Senate urging them to strip this provision before it reaches a vote.
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