A new proposal under Kentucky House Bill 380 is raising alarms in the crypto community, with the Bitcoin Policy Institute warning it could effectively force hardware wallet makers to introduce “backdoors” into their devices. The bill would require manufacturers to provide recovery mechanisms for passwords, PINs, and seed phrases—core elements used to secure crypto assets like Bitcoin.

Critics argue that such requirements undermine the very design of non-custodial wallets, which are built so that even manufacturers cannot access user keys. The provisions were reportedly added in a last-minute amendment, intensifying concerns that the legislation could weaken security standards and user control.