US States Consider Including Bitcoin in Strategic Reserves

Recently, a draft bill titled "2025 Bitcoin Strategic Reserve Act" has sparked widespread attention. The bill aims to incorporate Bitcoin as a strategic reserve tool into the financial systems of various states in the United States. This is not only an unprecedented attempt but also an innovative measure taken in the context of increasing global economic uncertainty to address inflation and enhance financial resilience.

Bitcoin: A New Type of Reserve Asset for State Governments?

The core objective of the draft is to empower state treasurers to incorporate Bitcoin into their financial reserves to guard against asset depreciation caused by inflation. This idea is derived from the successful experiences of several major strategic acquisitions in American history, such as the purchase of Manhattan and the Louisiana Purchase. These transactions initially seemed risky, but ultimately brought significant economic and strategic benefits to the United States.

The same logic can be applied to the potential acquisition of Bitcoin today. As a forward-looking strategic asset, Bitcoin possesses scarcity and long-term appreciation potential, similar to important resources in history. By incorporating Bitcoin into state financial reserves, the United States may continue this historically significant success and extend its financial dominance into the new era of the digital economy.

Legislative Intent: Enhance Fiscal Resilience and Innovation

The draft allows Bitcoin and other digital assets to be included in the state's financial portfolio as a means to combat inflation and economic uncertainty. The core objectives of the legislation include:

1. Protect the purchasing power of state finances and prevent assets from depreciating due to inflation.
2. Respond quickly to market changes and enhance returns through flexible investment policies.
3. Ensure that the investment strategy aligns with the goals of enhancing state economic security and financial resilience.

The bill particularly emphasizes flexibility, believing that in the context of an increasingly complex and rapidly changing global economy, the introduction of digital assets such as Bitcoin can provide a more diverse range of options for investment portfolios, allowing state governments to better cope with market risks.

Custody: Safeguarding Measures for Digital Assets

The draft proposes strict requirements for the security of digital assets. The custody methods for Bitcoin include three types: direct holding by the state treasury, holding by qualified custodians, or holding through products traded on registered exchanges. To ensure the security of digital assets, the draft proposes "secure custody solutions," which include the following measures:

• Private key exclusive control: The encrypted private key must be held by government entities and can only be accessed in an end-to-end encrypted environment.
• Geographically distributed data centers: The hardware devices for private keys must be stored in at least two geographically dispersed secure data centers.
• Multi-party governance structure: The authorization of each transaction must go through a multi-party governance structure to ensure strict approval and record-keeping.
• Disaster Recovery Mechanism: Custodial service providers must have a comprehensive disaster recovery mechanism.
• Regular code audits: Custodial solutions must undergo regular code audits and penetration testing by auditing firms.

Bitcoin Taxation: A New Source of Funding for Public Services

The draft also addresses the possibility of paying taxes with Bitcoin. According to the draft, taxes paid in Bitcoin will be transferred to the state’s general fund, while the state fund will compensate the corresponding digital asset accounts in USD. This arrangement not only ensures the flexible use of funds but also signifies a significant increase in the acceptance of Bitcoin at the state level.

In addition, the draft also allows state retirement funds to invest in products from registered digital asset exchanges, further enriching investment channels. These measures indicate that Bitcoin is not only a tool for combating inflation but may also become part of the funding sources for public services.

Risk Control Measures

To address the risks associated with the significant volatility of Bitcoin, the draft proposes several risk control measures:

• Investment limit: The state treasury's investment in Bitcoin shall not exceed 10% of the total amount of the relevant fund.
• Asset Lending: State finances can obtain additional revenue by lending Bitcoin, but must adhere to the rules established by state financial officials.
• Diversified investment strategy: Encouraging state governments to continue investing in other traditional financial assets while introducing Bitcoin.

Overall, the "2025 Bitcoin Strategic Reserve Act" is a bold attempt at financial innovation aimed at enhancing the resilience and flexibility of public funds by integrating Bitcoin, an emerging digital asset, into the state financial system. Whether this experiment will succeed and provide a new paradigm for future government investment and financial innovation remains to be seen. In any case, it reflects that in the digital age, governments are actively exploring new ways of fiscal management to cope with the ever-changing economic landscape.