Connecticut Bans the Use of Digital Currencies and Bitcoin Reserves
In a bid to go against the growing national trend, Connecticut has legalized one of the strictest crypto laws in the U.S., which bans government entities from investing in, accepting, or holding cryptocurrency.
Lawmakers passed this legislation—House Bill 7082, now Public Act No. 25-66—without dissent, and the governor signed it. The new rule bars the state and the local government from making use of digital currencies like Bitcoin for payments. The state cannot create a crypto asset under any law, resolution or ordinance.
The sweeping measure, however, puts Connecticut at odds with at least 31 other states moving forward with various Bitcoin reserve bills. While some governments are seeing crypto assets as avenues for innovation and diversification, Connecticut is being more cautious and highly regulated.
A Unified Political Push
The Joint Committee on Banking and Rustic Affairs introduced the bill earlier this year, and it quickly gained momentum with the backing of various Democratic legislators. It got support from both sides of the House and Senate; eventually, it passed without a no vote.
Critics say concerns of a political nature, particularly about former President Donald Trump’s ties to the crypto space, drove the legislation’s outcome. Some view it as a way to protect public money from the effects of the crypto market.
Stronger Consumer Protections and Business Oversight
Not only does the legislation prohibit crypto public financing, but it also imposes new regulatory standards on crypto businesses within the state. Organizations that provide crypto services must now include the warning: “Danger: The value of crypto-assets can fluctuate significantly, and you may lose all your money.”
For instance, businesses must display a message stating that your loss due to an accidental or fraudulent transaction through crypto may not be recoverable.
The law sets rules for businesses that deal with minors, requiring verified parental consent for users under 18 years old. There are also a few rules that update Connecticut’s money transmission laws, requiring more transparency and compliance from all digital asset service providers.
A Lone Voice Against the Trend?
Certain U.S. states—New Hampshire, Arizona, and Florida—are considering and introducing Bitcoin reserve initiatives, while Connecticut is quickly trying to distance itself. Regulation and auditing will be incorporated into the agile loop as a response to the anger expressed by brokers and exchanges.
Yet a law that attorney Aaron Brogan and others argue is largely symbolic at best, at worst prevents innovation. Brogan said it is less about solving a problem and more about making a statement. “Connecticut was never going to invest in Bitcoin; this is just a line in the sand,” he stated.
National Divide Over Crypto Policy Grows
Connecticut is making steps that add to a problem that may not go away. Although some states utilize digital assets as a part of their economic strategies, Connecticut is stepping back from this.
Connecticut’s position on crypto involvement reminds us of a divided path for digital assets. The ongoing debate over how involved states should be with crypto is shaping up, and we can see how states in the U.S. will adopt it.
