Senate Bill 535 aims to regulate digital assets, including cryptocurrency, by limiting the authority of state agencies and local governments to impose restrictions on their use. The bill explicitly prohibits these entities from preventing individuals from accepting digital assets as payment for legal goods and services or from using self-hosted or hardware wallets to take custody of digital assets. Additionally, it allows individuals to operate nodes, develop software, transfer digital assets, and participate in staking on blockchain protocols without interference from state or local regulations.

The bill also introduces an exception to the current regulation of money transmitters, allowing individuals engaged in specific blockchain-related activities—such as operating nodes, exchanging digital assets without involving legal tender, and digital asset mining—to operate without a license from the Department of Financial Institutions. Furthermore, it creates a new exemption for transactions related to digital asset staking, easing securities-related requirements for third-party service providers that facilitate staking rewards. Overall, the bill establishes a framework that promotes the use and development of digital assets while reducing regulatory barriers.