Kentucky Bill Would Effectively Ban Crypto Self-Custody, Industry Warns
A contentious amendment inserted into a broader Kentucky regulatory bill would, if enacted, prohibit or severely restrict self-custodial crypto wallets — the tools many users rely on to hold private keys and control their own assets. Lawmakers added the language without broad public debate, and critics say the measure would effectively force residents to use custodial providers, undermining personal custody and privacy rights.
Supporters of self-custody warn the change could chill crypto adoption in the state, create enforcement headaches, and invite legal challenges on constitutional and consumer-protection grounds. Industry groups, privacy advocates, and some technologists are expected to push back during committee review and public comment, arguing the amendment conflates custody with fraud risk and fails to account for technical realities of decentralized finance.