Connecticut Bans State Investment in Bitcoin, Setting a Precedent for Other States to Follow

The US state of Connecticut has officially passed Bill HB7082, marking a significant turning point as it completely bans state investment in Bitcoin and other cryptocurrencies.

The US state of Connecticut has officially passed Bill HB7082, placing a ban on the commonwealth from investing in Bitcoin and other cryptocurrencies.

This legislation marks a significant turning point as it completely cancels any previous authorization for the state to accept, hold, or invest in any type of virtual currency.

It also imposes several new requirements on money transmitters.

Notably, both the state Senate and House passed HB7082 without a single vote in opposition. This indicates a strong and unified stance from the state government in enacting this measure.

"🚨 NEW: Connecticut passes law to ban state investment in bitcoin.HB7082 prohibits the state from accepting, holding, or investing in any virtual currencies.It also imposes several new requirements on money transmitters."

The bill, which is now heading to the desk of Governor Ned Lamont, includes provisions to 1:1 reserve requirement, risk disclosure statement for users, and special protections for seniors and large transactions.

It is pertinent to note that Connecticut appears to be moving in the opposite direction compared to the broader US landscape.

During the Trump administration, the federal government undertook the establishment of a “Strategic Bitcoin Reserve” and engaged in meetings with cryptocurrency investors.

Moreover, several other states are taking steps towards integrating Bitcoin and digital assets into their financial policies.

For instance, New York is currently reviewing a bill that would permit residents to utilize cryptocurrencies like Bitcoin and Ethereum for settling state-related obligations, including taxes.

Furthermore, New Hampshire recently became the first US state to create a Bitcoin Reserve, enabling investments in crypto assets with a market cap over $5 billion or that are listed on major exchanges.

After Connecticut’s decision was made known, many industry leaders expressed their disappointment.

CIO of Bitwise Matt Hougan responded with sarcasm, suggesting that banning Bitcoin wouldn’t be a rational economic decision but rather one driven by personal frustration or special interests.

“The hedge fund managers got so upset they couldn’t beat Bitcoin, they are going to have to sell Apple to get the return they want. So they got the state to ban bitcoin.”

While many investors viewed Connecticut’s move as short-sighted, Kevin, CEO of Hummingbird, hinted that it could actually be a strategic diversification play. He suggested it could benefit Connecticut residents who work in New York City, one of the major financial hubs in the US.

“This is a diversification play for all the people that live in Connecticut and work in NYC. They want their finance funds to be able to buy the BTC that the state is forced to sell. Why have your state government own it when your NYC hedge fund can make money off of it. This is actually bullish!”

In a broader context, the Bitcoin reserve movement in the US appears to be slowing down.

For instance, in Florida, two bills — H0487 and S0550 — that proposed using up to 10% of public funds to invest in Bitcoin were withdrawn when the legislative session ended on May 3.

Similarly, in Arizona, Governor Katie Hobbs vetoed two crypto-related bills — SB 1373 and SB 1024 — effectively blocking efforts to integrate digital assets into public finance in the state. These bills would have required state agencies to accept crypto payments and authorized the state treasurer to invest in Bitcoin.