A Kentucky bill, House Bill 380, has raised alarms in the crypto community. Sponsored by Representatives Aaron Thompson and Tom Smith, the legislation would force hardware wallet providers to offer recovery mechanisms for users' seed phrases and passwords.
The Bitcoin Policy Institute (BPI) warns this mandate is technologically impossible for non-custodial wallets, undermining private key self-custody-a core tenet of cryptocurrency security. Critics argue it could push users toward centralized solutions vulnerable to hacks.
In contrast, SEC officials like Chair Paul Atkins and Commissioner Hester Peirce have publicly supported self-custody as essential to financial freedom.
