State-level Bitcoin initiatives and the shift to collaborative custody

State-level legislative tension

Texas lawmakers passed SB 21 to create a strategic cryptocurrency reserve, but Governor Greg Abbott has not signed it. This bill has sat waiting for roughly three months. Abbott called himself a "crypto law proposal supporter" in 2021 and wanted Texas to be a "crypto capital" in 2024. While Governor Abbott expressed support for making Texas a crypto capital in 2024, the passage of SB 21 remains stuck because the decision rests on his shoulders after the bill was introduced three months ago. In New Hampshire, Governor Kelly Ayotte signed a Bitcoin reserve bill on May 6. Arizona Governor Katie Hobbs also approved a law that allows the state to claim ownership of unclaimed crypto. South Carolina Governor Henry McMaster signed S. 163 into law on May 19. This South Carolina law prohibits restrictions on accepting digital assets as payment and bans the use of central bank digital currencies. These different state paths create a fragmented environment for bitcoin.

Unchained and the Minnesota shift

Minnesota changed the rules for local banks on May 15. Governor Tim Walz signed HF 3709, which permits banks and credit unions to offer virtual currency custody services. These institutions can start these services on August 1, 2026. They must maintain written policies for risk management and cybersecurity. They also have to give the Minnesota Commissioner of Commerce 60 days of notice. This law ensures customer virtual currency remains legally and operationally segregated from bank assets. Unchained secured more than 100,000 BTC for its clients in 2024. The firm provides collaborative custody through Signature, which provides white-glove setup, and Connections, which lets clients build vaults with advisors, family, or friends. Signature for Business provides these same services to companies with unique needs. Unchained also uses Caravan, an open-source multisig tool, to help users maintain control. The Unchained app allows clients to track vault balances, bitcoin prices, and network fees. In 2024, Unchained facilitated a 1.0 BTC grant to the Human Rights Foundation and a bitcoin grant to Base58 via its donor-advised funds. You should watch these state-level legislative battles closely.

Regulatory movement and figures

Regulatory bodies in the US continue to shape the market. The SEC granted Paxos Securities Settlement Company temporary registration for 18 months on May 27. This allows the firm to act as a central securities depository. FINRA also approved Securitize Markets to custody tokenized securities on May 4. This approval lets firms settle trades between tokenized stocks and stablecoins on-chain in one step. The CFTC also approved KalshiEX for BTCPERP perpetual futures on May 29. Hong Kong’s FSTB and SFC published consultation conclusions on virtual asset advisory and management regimes on May 26. In the UK, the FCA and Bank of England opened a joint consultation on May 18 to seek industry feedback on tokenized wholesale financial markets.

Fraud and fee disputes

Regulatory friction and legal enforcement impact market participants. The Illinois legislature passed SB 3019 on June 1, which establishes a 0.2% privilege tax on digital asset transactions. This tax increases the cost of doing business for brokers in Illinois. Noncompliance with this tax constitutes a Class 3 felony. The Missouri Attorney General filed a suit against CoinFlip on May 21. The suit alleges the operator charged hidden fees of up to 21.9% and facilitated fraud. In Texas, the SEC charged resident Nathan Fuller for a $12.3 million fraud through his company, Privvy Investments, LLC. Fuller allegedly used proprietary AI-based trading bots to conduct arbitrage. The SEC claims these bots did not function as represented. In Ohio, Rathnakishore Giri received a nine-year prison sentence for a $10 million cryptocurrency fraud. In Danbury, Adam Iza pleaded guilty to a conspiracy involving a $245 million bitcoin theft. Will the Texas legislature break the stalemate before other states capture the market? The Missouri Attorney General continues to seek $1.8 million in penalties from the bitcoin ATM operator.