Kentucky’s House Bill 380 is facing strong opposition from industry advocates, who say the proposed rules are technically unworkable and threaten user privacy. The Bitcoin Policy Institute argues that requiring wallet providers to recover seed phrases contradicts how hardware wallets function, as these devices are designed to ensure only users control access.

The bill would also introduce identity verification requirements for users requesting account recovery, raising additional concerns about privacy and surveillance. Critics warn that such measures could push users toward centralized custodians, increasing exposure to hacks, failures, and third-party risks.