Connecticut has become the first U.S. state to formally prohibit its government from investing in cryptocurrencies, including Bitcoin, marking a significant departure from a growing trend among states considering digital assets as part of their financial reserves.
On June 10, 2025, Connecticut lawmakers passed legislation that bans all state agencies, pension funds, and other government bodies from purchasing or holding cryptocurrencies as investments. The act, which takes effect immediately, was enacted amid concerns over the volatility, regulatory uncertainty, and security risks associated with digital assets.
The move comes as several states, such as Texas and Wyoming, have explored or implemented policies to add Bitcoin and other cryptocurrencies to their treasuries, viewing them as potential hedges against inflation and tools for financial innovation.
State officials cited the lack of federal regulatory clarity and the recent volatility in crypto markets as key reasons for the ban. Connecticut State Treasurer Erick Russell emphasized the need to protect taxpayer funds from what he described as “speculative and unregulated” assets.
“Our priority is safeguarding the state’s financial stability,”
Russell said, adding that the risks of crypto exposure currently outweigh potential rewards.
The legislation also follows a series of high-profile crypto bankruptcies and security breaches in recent years, which have raised questions about the suitability of digital assets for public funds.
Connecticut’s decision stands in contrast to a broader movement among U.S. states to embrace crypto. For example, Texas lawmakers have proposed bills to allow the state to hold Bitcoin as part of its reserves. At the same time, Wyoming has positioned itself as a crypto-friendly jurisdiction with supportive regulations.
As the federal government continues to develop a regulatory framework for digital assets, Connecticut’s ban may be revisited in the future. For now, the state has drawn a clear line, prioritising caution over experimentation with crypto in public finance.
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