Kentucky crypto bill sparks backlash over hardware wallet 'backdoor' rule

A proposed cryptocurrency regulation bill in Kentucky is drawing criticism for including a provision that would effectively mandate a "backdoor" for hardware wallets, Cointelegraph reported. According to the Bitcoin Policy Institute (BPI), an amendment to House Bill 380 would require wallet manufacturers to support the resetting of user access information, such as passwords, PINs, and seed phrases. The bill also mandates an identity verification process for such requests. The BPI argued that this is technically impossible for non-custodial hardware wallets, as manufacturers cannot access or recover user seed phrases. The institute warned that such a rule undermines the core crypto value of self-custody and could inadvertently push users toward centralized custody services.