Connecticut Bans State Investment in Bitcoin and Other Digital Assets

Bitcoin and other digital assets have been dealt a significant blow in the state of Connecticut following the passage of a sweeping new law

A new law passed by the Connecticut legislature has banned the state and local governments in the state from investing in any form of virtual currency, including Bitcoin. The legislation, designated as HB7082 and officially titled “An Act Concerning the Regulation of Virtual Currency and State Investments,” marks a decisive shift in the state’s stance on cryptocurrency.

HB7082, which was passed by the legislature and now awaits the governor’s signature, prohibits the allocation of public funds, such as state pension reserves and municipal capital, towards Bitcoin or any other cryptocurrency. This move highlights the state’s cautious approach, citing concerns about market volatility and financial risk exposure.

Prohibiting state and local government units from accepting, holding, or investing in any virtual currencies.

This legislation also imposes several new requirements on money transmitters.

— Bitcoin (@Bitcoin) May 10, 2023

Beyond the investment ban, HB7082 introduces a set of stringent regulatory measures aimed at tightening the oversight of crypto-related activities within Connecticut.

One provision requires payment applications that facilitate crypto transactions to verify parental consent for users under the age of 18. This youth protection clause is intended to limit the early exposure of minors to high-risk financial instruments.

The law also mandates strict compliance with anti-money laundering (AML) frameworks. Crypto businesses operating in Connecticut will now be required to implement AML protocols consistent with federal standards, further aligning the digital asset space with traditional financial regulation. State officials maintained that these measures are crucial to prevent the misuse of digital currencies for illicit purposes.

This regulatory crackdown stands in contrast to the crypto-friendly approaches being adopted by several other U.S. states. A growing number of states, including Texas, Wyoming, and Florida, have been pushing forward initiatives to create a Strategic Bitcoin Reserve (SBR). These efforts align with the policy stance of the Donald Trump administration, which has signaled intentions to adopt an SBR at the federal level if reelected.

While Connecticut doubles down on regulation and restriction, other parts of the country are moving in a different direction. On Tuesday, the state of Louisiana announced plans to form a dedicated committee to explore the impact and potential of emerging technologies. This includes artificial intelligence (AI), blockchain, and cryptocurrency.

“WHEREAS one in five Americans owns cryptocurrency…it is in the interest of Louisiana to consider the benefits and challenges of these technologies,” noted a resolution by the Louisiana legislature.

As the national debate over the future of cryptocurrency intensifies, Connecticut’s move signals a growing divide among U.S. states. Some are embracing Bitcoin as a vehicle for innovation and economic resilience, while others, like Connecticut, opt for a more cautious, regulated path. The trajectory of this state-level experimentation could ultimately shape the broader regulatory landscape for digital assets across the United States.

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