Kentucky Lawmakers Approve Bill Favoring Bitcoin Self-Custody and Mining Rights

Kentucky lawmakers have approved HB 701, a bill that aims to strengthen Bitcoin self-custody rights and create a friendly environment for crypto mining operations across the state.

The bill, introduced by Representatives Adam Bowling and T.J. Roberts, gained unanimous approval from both legislative chambers on March 14.

Kentucky’s Push Pro-Bitcoin Policies

HB 701 strengthens individual rights by clearly allowing the self-custody of digital assets like Bitcoin through privately controlled wallets. It also safeguards Bitcoin mining operations by preventing discriminatory zoning regulations that could unfairly target miners.

Additionally, it removes certain financial licensing requirements for small-scale miners, lowering entry barriers for independent participants in the industry.

Kentucky’s Senate Majority highlighted these protections on X (formerly Twitter), stating that the bill shields node operators and staking providers from liability for validated transactions.

It also ensures that digital asset mining and staking activities remain exempt from money transmitter and securities regulations. The Attorney General’s Office has the authority to enforce these exemptions.

“[The bill] shields node operators and staking providers from liability for validated transactions and exempts digital asset mining and staking from money transmitter and securities regulations. The Attorney General’s Office is authorized to enforce violations,” Kentucky’s Senate Majority explained on X.

Meanwhile, a significant provision of the bill clarifies that Bitcoin mining and staking services will not be classified as securities. This distinction provides greater regulatory certainty for industry participants.

Beyond mining and self-custody, the HB 701 bill safeguards individuals’ rights to use digital assets for payments. It prohibits additional taxes or fees on digital asset transactions beyond those imposed on standard financial payments.

Overall, this provision aims to enhance Bitcoin’s utility as a medium of exchange within the state.

“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,” the bill stated.

With approval from both houses, the bill now awaits the governor’s signature. If signed into law, it will reinforce Kentucky’s reputation as a crypto-friendly state and encourage further innovation in the digital asset sector.

Meanwhile, HB 701’s passage comes as lawmakers consider a separate bill to establish a Bitcoin reserve. This initiative would allocate a portion of Kentucky’s excess funds to digital assets, providing the state with an alternative store of value.

Although the bill does not explicitly mention Bitcoin, it references digital assets—excluding stablecoins—with a market capitalization exceeding $750 billion. Bitcoin’s market capitalization is currently at $1.7 trillion, making it the only asset meeting these criteria.

Despite this proposal remaining under review, Kentucky’s proactive approach places it among states pushing for greater Bitcoin adoption.