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 taking custody of digital assets through self-hosted or hardware wallets. 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 existing regulations governing money transmitters, allowing individuals engaged in blockchain-related activities—such as operating nodes, exchanging digital assets, and mining—to operate without a license from the Department of Financial Institutions. Furthermore, it creates a new exemption for digital asset staking transactions, relieving individuals from certain securities-related requirements when providing technical solutions for token owners to earn rewards through staking. Overall, the bill establishes a framework that promotes the use and development of digital assets while reducing regulatory barriers.