News

Kentucky lawmakers in the House of Representatives have approved a bill that has sparked heated debate in the field of cryptocurrencies. The main requirement of this document is to oblige the creators of hardware crypto wallets to provide users with the ability to recover lost passwords, PIN codes and seed phrases. The initiative has now been sent to the Senate for further discussion.

Representatives of the Bitcoin Policy Institute (BPI), an organization actively involved in regulating bitcoin and other digital assets, were the first to respond to this proposal. The BPI stated that the proposed regulations contradict the very essence of non-custodial wallets. The peculiarity of such wallets is that private keys and seed phrases never leave the user's device, and the manufacturer simply does not have access to them.

According to BPI, forcing manufacturers to create recovery systems will require the transfer of confidential data to third parties, be it technical support or remote servers. This not only increases the likelihood of data leakage, but also undermines the very idea of self-custody. If the manufacturer can restore the LED phrase, it ceases to be solely your secret.

The Bitcoin Policy Institute emphasizes that the proposed rules initially contradict the principles of operation of hardware wallets. It is not yet known whether the Senate will approve this bill, but the very fact of its adoption in the lower house has already become a noticeable signal for participants in the crypto market.