The Kentucky HB 701 law guarantees the right to self-custody for cryptocurrency holders and protects mining operations.
According to the Satoshi Action Fund, on March 24, Kentucky passed a law that strengthens self-custody rights for Bitcoin and other cryptocurrencies. The HB 701 law, signed by Governor Andy Beshear, establishes protections for digital asset holders and creates a favorable environment for mining activities within the state.
Right to self-custody
The legislation, which received unanimous approval from both legislative chambers on March 14, reinforces individual rights by explicitly allowing the self-custody of Bitcoin and other digital assets through non-custodial wallets directly controlled by users.
Additionally, the law states:
“Digital assets used as a method of payment shall not be subject to additional taxes, withholdings, assessments, or charges that are based solely on the use of the digital asset as the method of payment.”
Protection for mining activities
Another key aspect of HB 701 is the protection of mining operations. The new law safeguards Bitcoin mining activities by preventing discriminatory territorial regulations that could impact miners. Moreover, it removes certain financial licensing requirements for small-scale miners, lowering entry barriers for independent participants in the sector.
The law also clarifies that mining and staking services will not be classified as securities, providing greater regulatory certainty for industry operators and exempting them from money transmitter regulations.
Kentucky and the Bitcoin reserve
The passage of HB 701 comes as Kentucky lawmakers are considering another bill (HB 376) to establish a strategic Bitcoin reserve. This initiative, introduced by Representative Theodore Joseph Roberts, would allocate up to 10% of Kentucky’s state funds to digital assets.
Although the proposal does not explicitly mention Bitcoin, it refers to digital assets—excluding stablecoins—with a market capitalization exceeding $750 billion. Given its current market capitalization of $1.7 trillion, Bitcoin is the only asset that meets this criterion.
