- South Carolina proposes a Bitcoin reserve, aiming to protect state funds from inflation risks.
- The bill allows Bitcoin donations and mandates transparency through public transaction records.
- Coinbase lawsuit dismissed, signaling South Carolina’s shift toward a more crypto-friendly stance.
South Carolina lawmakers have introduced a bill that proposes creating a state-managed Bitcoin reserve, with a cap of 1 million BTC. Meanwhile, the initiative aims to protect state finances from inflation by allowing Bitcoin and other digital assets to be held as part of the state’s financial strategy.
Bitcoin Reserve Proposal and Investment Rules
The Strategic Digital Assets Reserve Act, filed on March 27, seeks to authorize the state treasurer to invest in Bitcoin using unused or uncommitted funds. The reserve would serve as a hedge against inflation, which lawmakers argue has reduced the value of retirement funds and other state-managed assets.
The bill sets investment rules to ensure proper management and security. The state would be required to store its digital assets using cold wallets or certified custodians. Holdings of digital assets would be limited to 10% of the total funds under management, with a maximum cap of 1 million BTC.
Additionally, public addresses of the Bitcoin reserve would be published to maintain transparency and allow citizens to track transactions.
Public Donations and Transparency Measures
The proposed reserve would also allow South Carolina residents to donate Bitcoin and other digital assets voluntarily. This feature could increase the reserve’s holdings while giving citizens a way to support the state’s financial security efforts.
To ensure accountability, the bill mandates that the state treasurer provide regular reports on the reserve’s holdings. These reports would detail Bitcoin transactions and balance updates, allowing the public to verify the state’s digital asset reserves.
Moreover, the bill comes as South Carolina moves toward a more crypto-friendly regulatory environment. On March 27, Coinbase’s chief legal officer, Paul Grewal, announced that the state had dropped its lawsuit against the exchange’s staking services. The lawsuit had previously prevented South Carolina residents from earning staking rewards, resulting in an estimated loss of nearly $2 million for users.
Grewal commented on the lawsuit’s dismissal, stating,
“52 million Americans own crypto and need clear rules and consumer protections.”
He also expressed hope that other states would reconsider their stance on crypto staking.
Other States Exploring Crypto Investments
South Carolina is not the only state considering Bitcoin investments. According to our recent report, North Carolina lawmakers have introduced bills that could allow up to 5% of state retirement funds to be invested in cryptocurrencies, including Bitcoin. House Bill 506 and Senate Bill 709 propose the creation of an independent investment authority to manage digital asset investments for the state’s retirement funds.
If South Carolina’s Bitcoin reserve proposal is approved, it could become one of the largest state-held digital asset reserves in the United States. The bill’s progress will be closely monitored as lawmakers debate the role of Bitcoin in state financial strategies.
