Connecticut’s House Bill 7082 Prohibits State And Local Government From Crypto

Connecticut Governor Ned Lamont signed House Bill 7082 into law, prohibiting state and local government entities from accepting, holding, or investing in cryptocurrencies, including Bitcoin. The legislation, effective October 1, 2025, also bans the state from establishing a crypto asset reserve, making Connecticut one of the few U.S. states to explicitly reject such initiatives.

The bill, which passed unanimously in both the House and Senate, aims to protect public funds from the volatility and regulatory uncertainties of digital assets. It also imposes strict regulations on crypto businesses, requiring licensing, consumer risk disclosures, and protections for minors, such as parental consent for users under 18. However, it does not ban residents from owning, trading, or investing in Bitcoin or other cryptocurrencies, contrary to some misleading reports. The legislation focuses solely on public funds and state-level activities, aiming to shield taxpayer money from the volatility and regulatory uncertainties of digital assets.

Matt Hougan of Bitwise, view it as a shortsighted move that could hinder Connecticut’s ability to innovate in the digital economy. By barring state investment in digital assets, Connecticut may miss out on potential long-term financial benefits seen in states like Texas, which allocated $10 million to a Bitcoin reserve. This move contrasts with states like Texas, Arizona, and New Hampshire, which are pursuing Bitcoin reserves.

Critics argue the ban may stifle blockchain innovation, while supporters, including State Representative Jason Doucette, emphasize consumer and taxpayer protection. The law reflects Connecticut’s cautious approach amid a national debate, with 48 state-level crypto reserve proposals under consideration across the U.S. By prohibiting state and local entities from investing in or holding cryptocurrencies, Connecticut prioritizes fiscal stability, shielding public funds from the volatility of digital assets like Bitcoin, which have seen price swings of over 50% in recent years.

This could set a precedent for other states wary of crypto’s risks. The law’s licensing requirements and consumer protections, including mandatory risk disclosures and parental consent for minors, aim to curb fraud and enhance transparency in crypto businesses. This could strengthen consumer confidence but may deter smaller crypto firms due to compliance costs. Critics argue the ban could hinder blockchain and fintech innovation, potentially driving startups to crypto-friendly states like Texas or Wyoming.

Connecticut risks missing out on economic growth in a sector projected to reach a global market size of $13.2 billion by 2027. The unanimous bipartisan support for the bill reflects a rare consensus on crypto skepticism, potentially influencing other states to adopt similar restrictions, especially those prioritizing fiscal conservatism.

States like Texas, Arizona, and New Hampshire are embracing crypto, with initiatives to establish Bitcoin reserves or tax incentives for blockchain businesses. For example, Texas has passed laws allowing state-chartered banks to custody crypto, aiming to become a digital asset hub. These states view crypto as a hedge against inflation and a driver of economic innovation.

Connecticut joins states like New York, which has stringent crypto regulations (e.g., the BitLicense), in prioritizing consumer protection and financial stability over innovation. These states cite risks like market volatility, fraud, and environmental concerns from crypto mining. State-level crypto reserve proposals pending, the divide reflects competing visions: economic opportunity versus risk management. Connecticut’s ban aligns with the latter, potentially isolating it from the pro-crypto momentum in states betting on digital assets as a future economic driver.