In a controversial legislative move, Connecticut Governor Ned Lamont signed House Bill 7082 into law, officially banning the possession, investment, or establishment of reserves of digital currencies, primarily Bitcoin, by government entities in the state.
This legislation is the first of its kind in the United States and represents a departure from the public policies adopted by other states that encourage the development of digital currency infrastructure.
The law prohibits the acceptance or investment in digital currencies by government entities
The new law explicitly states that the state or any of its political subdivisions may not accept or request payment using digital currencies for any amounts owed, and prohibits these entities from purchasing, possessing, or investing in any type of digital assets.
Connecticut legislators clarified that this approach comes from a desire to protect consumers and reduce risks amid rising concerns about the volatility of the digital currency market and its lack of comprehensive regulation.
The new legislation focuses on consumer protection and avoiding speculative investment practices. It also requires digital currency companies operating in Connecticut to fully disclose potential risks, such as transaction irreversibility, the absence of government insurance, and the possibility of incurring irrecoverable losses, which are considered some of the biggest challenges in the global digital currency landscape.
Strict limits on virtual currency kiosks
The law also imposes daily limits on transactions made through digital currency kiosks, set at $2000 daily for new customers and $5000 for existing customers.
These kiosks are also required to provide direct support to customers and hire a full-time compliance officer to oversee adherence to the new regulations. These conditions are among the most stringent for regulating the digital currency environment within the United States.
Connecticut takes an opposing path to other U.S. states
This law distinguishes Connecticut from states like Texas, Arizona, and New Hampshire, which continue to encourage digital currency reserves and regard them as future components of the financial system. The legislation has elicited mixed reactions from industry experts and policymakers, with some viewing it as a necessary step to mitigate risks, while others consider it a barrier to innovation and development in the digital currency industry.
Under this legislation, Connecticut appears determined to impose stringent oversight at a time when other states are opening up to digital assets, making it a focal point for investors and developers who are monitoring legal shifts in the digital currency environment within the United States.
