Kentucky Enacts 'Bitcoin Rights' Bill, Protecting Self-Custody and Mining Activities

The law guarantees individuals the right to self-custody their digital assets using self-hosted wallets

Governor Andy Beshear has signed House Bill 701, often referred to as the ‘Bitcoin Rights’ bill, into law in Kentucky. This move signifies a step forward in the state's endeavor to become a cryptocurrency hub.

The legislation, which passed the state House and Senate and now heads to the desk of the governor, aims to provide legal protections for Bitcoin (BTC) users and miners in the commonwealth. The bill is intended to safeguard the rights to self-custody, operate a node, and utilize digital assets without the risk of discrimination. It also seeks to prevent state and local governments from imposing restrictions on individuals who wish to use BTC for transactions.

"The future is bright for Kentucky, and we are continuing to move forward, rolling up our sleeves and working hard to create a commonwealth where everyone has the opportunity to succeed," Beshear said. "We are a state that welcomes new ideas and emerging technologies, and we will continue to invest in the people and programs that will serve generations to come."

The bill, which was sponsored by State Representative Steven Hacker and State Senator David Mann, aims to provide legal protections for Bitcoin users and miners in the state. The legislation also grants BTC miners legal protections, ensuring they are not unfairly targeted by regulations that could stifle innovation. Additionally, the bill clarifies that BTC mining operations should be treated as legitimate business activities under state law.

"We are thrilled that Governor Beshear has signed HB 701 into law," said the Satoshi Action Fund in a statement on X. "This legislation will help to ensure that Kentucky remains a beacon of liberty and innovation."

The bill, which passed the state House and Senate and now heads to the desk of the governor, is intended to provide legal protections for Bitcoin users and miners in the commonwealth. It also aims to prevent state and local governments from imposing any restrictions on individuals who wish to use Bitcoin for transactions.

The legislation had been actively worked on by the Satoshi Action Fund, which described it as a "victory for financial sovereignty."

"This is a huge win for the people of Kentucky and for the future of cryptocurrency in America," said Action Fund president Asher Defio. "At a time when the federal government is threatening to impose new regulations that could crush the industry, it's refreshing to see a state taking steps to protect the rights of cryptocurrency users and miners."

The bill notably prohibits local governments from enacting any discriminatory zoning laws that could hinder digital asset mining activity. It had previously been reported that the state's favorable energy rates were attracting interest in bitcoin mining.

The legislation also clarifies that digital asset mining and staking are not classified as securities under state law, while it exempts home-based bitcoin miners and digital asset mining businesses from the state’s money transmitter licensing requirements. It is not clear what types of activities would fall under the money transmitter category.

The bill's passage could have broader implications for the future of cryptocurrency legislation in the United States. As the federal government continues to debate and develop its own regulatory framework for cryptocurrencies, individual states are taking their own initiative to set forth their policies and stance on digital assets.

The passage of the 'Bitcoin Rights' bill in Kentucky showcases the growing recognition and acceptance of cryptocurrencies, such as Bitcoin, as legitimate financial instruments and technological innovations.

The bill's success may inspire other jurisdictions to follow suit in adopting crypto-friendly policies, which could ultimately accelerate the mainstream adoption of Bitcoin and related technologies. Meanwhile, industry stakeholders view this development as a step toward regulatory clarity, which is crucial for businesses and investors to make informed decisions and allocate resources effectively.

Overall, the signing of House Bill 701 marks a turning point in Kentucky's economic and technological landscape, setting the stage for a future where cryptocurrency and blockchain technology play a central role in driving innovation, investment, and job creation.