Connecticut Passes HB7082, Banning State Government from Holding or Investing in Cryptocurrencies

On June 10, Connecticut unanimously passed HB7082, a bill that prohibits state government entities from accepting, holding, or investing in virtual currencies, including Bitcoin (BTC). The legislation, introduced in February by Representatives Kenneth Gucker, Patricia Miller, and Matthew Lesser, also imposes stringent requirements on virtual currency control services vendors and money transmitters, marking a cautious approach to crypto regulation in the state. This move stands in stark contrast to other U.S. states actively pursuing strategic Bitcoin reserves and federal efforts to establish clearer regulatory frameworks for digital assets.

Connecticut’s HB7082: A Comprehensive Crypto Crackdown

HB7082, which passed with no opposition in both the Connecticut House and Senate, explicitly bans state agencies from engaging with virtual currencies in any capacity, including as a form of payment or investment. The bill also prohibits the establishment of a state-level virtual currency reserve, a direct rebuke to growing trends in other states. Beyond restricting state involvement, HB7082 introduces robust consumer protection measures for crypto businesses operating in Connecticut. Virtual currency control services vendors—defined as entities that control virtual currency under agreements with others—are now subject to strict requirements. These include mandatory disclosures of all material risks associated with cryptocurrencies in “clear, conspicuous, and easily recognizable English,” as well as providing detailed receipts for transactions. The law also mandates that licensees treat virtual currency as property interests of claimants, safeguarding customer assets in cases of insolvency or mismanagement.

To protect minors, HB7082 requires crypto businesses to verify the legal guardianship of users under 18, adding an extra layer of oversight. Additionally, the bill tightens regulations on money transmitters, imposing new licensing and compliance requirements that could raise operational costs for smaller crypto startups.

A Contrast with National Trends: Strategic Bitcoin Reserves

Connecticut’s restrictive stance contrasts sharply with the proactive approach of other U.S. states exploring strategic Bitcoin reserves. In May, New Hampshire became the first state to pass a strategic Bitcoin reserve bill, followed closely by Arizona. States like Texas, North Carolina, and Oklahoma are also advancing similar legislation, aiming to integrate Bitcoin into their financial strategies as a hedge against inflation and economic uncertainty. These initiatives reflect a growing belief in Bitcoin’s long-term value, with states like Texas leveraging their pro-crypto regulatory environments to attract blockchain businesses.

In a stark contrast to pro-crypto policies elsewhere, critics argue that Connecticut’s conservative approach may drive cryptocurrency-related innovation and businesses toward states like New Hampshire, Arizona, and Texas, which have embraced digital assets.

Federal Developments: GENIUS and CLARITY Acts

At the federal level, bipartisan efforts are underway to provide regulatory clarity for the crypto industry. The GENIUS Act, focused on establishing rules for stablecoin issuance and operations, is awaiting a Senate vote after gaining traction in Congress. Meanwhile, the CLARITY Act, which aims to create a comprehensive regulatory framework for digital assets, passed the House Agriculture Committee on June 10 and is now under review by the House Financial Services Committee.

While bipartisan efforts to advance these bills have not been without contention, disagreements primarily center on specific provisions and broader political concerns. For instance, Democratic Senator Elizabeth Warren has raised concerns about potential conflicts of interest involving the Trump family’s crypto ventures, advocating for amendments to prevent senior officials, such as those tied to Trump, from leveraging crypto legislation for personal gain. Nevertheless, both parties broadly agree on supporting cryptocurrency development and expanding the adoption of assets like Bitcoin. These federal initiatives signal a push toward a more structured crypto ecosystem, contrasting with Connecticut’s conservative approach.