Connecticut Governor Ned Lamont has signed House Bill 7082 into law, enacting a ban on state entities investing in or holding cryptocurrency and other digital assets. The bill, which passed unanimously in the Connecticut General Assembly, prohibits the state and its political subdivisions from accepting virtual currency as payment or establishing any digital asset reserves.

The legislation defines virtual currencies as any digital unit used as a medium of exchange or a form of digitally stored value integrated into payment system technology, including cryptocurrencies like Bitcoin and Ethereum, as well as tokenized assets. This ban extends to all state government entities, including public pension funds, preventing them from investing in digital assets.

This move positions Connecticut as one of the most restrictive states concerning cryptocurrency adoption, contrasting with the growing trend of state-level crypto adoption seen in states like Texas, New Hampshire, and Arizona, which have established Bitcoin reserve frameworks. Currently, 26 states have introduced 47 Bitcoin reserve bills.

According to lawmakers, the decision to ban cryptocurrency investments is meant to protect consumers and the state from the volatility and complexity often associated with digital assets. The bill reflects concerns over regulatory uncertainty and potential fiscal risks associated with holding crypto in public funds. By prioritizing financial prudence over speculative asset exposure, Connecticut signals a cautious regulatory approach that could potentially reshape how states interact with digital assets in the future.

The new law also outlines strict rules for crypto-related businesses operating within the state. Crypto businesses must now provide extensive disclosures about material risks, including warnings about fraud potential, market volatility, and the irreversible nature of transactions. Additional consumer protections include parental verification for users under 18 years old. Money transmission licensees must maintain virtual currency holdings equal to customer obligations while prohibiting unauthorized use of controlled assets. The legislation establishes that virtual currency held by licensees becomes property interests of claimants, creating additional legal protections for consumers.

While the ban may limit immediate fintech growth within Connecticut, it highlights the complexities and risks associated with digital asset investments at the governmental level. The evolving landscape underscores the importance of ongoing dialogue between policymakers, industry stakeholders, and investors.