US States’ Bitcoin Reserve Demands May Carry Little Weight

Rather than waiting to determine if Donald Trump will act on his endorsement of a national “strategic” Bitcoin reserve, several states are proactively pursuing legislation.

As local legislative sessions commence, eight states have already proposed bills advocating for crypto reserves. Although this movement to ensure state governments retain Bitcoin in some capacity has garnered support from long-time crypto enthusiasts, there remains a question as to whether it will translate to meaningful progress.

“The Blockchain advocates are missing the mark here,” commented Randy Erben, an adjunct professor at the University of Texas School of Law, regarding the strategic reserve initiative in Texas. “This is not a top priority for leadership on either side of the political spectrum or for the governor. While there may be some interest, it’s unlikely that this will secure passage given its low bill number.”

Texas has been developing reserve legislation over the past three years, as noted by Lee Bratcher, president of the Texas Blockchain Council. The Strategic Bitcoin Reserve Bill, introduced by Representative Giovanni Capriglione in December, aims to permit the state to accept Bitcoin donations from Texas residents and in-state companies to establish its reserve. Following Texas, states like Massachusetts, Wyoming, and New Hampshire have also proposed similar measures. According to one lobbyist, at least 13 states are expected to introduce comparable legislation.

“We are striving to enact our bill before President Trump establishes a national Bitcoin reserve,” Bratcher mentioned. “We aim to position the U.S. as the forefront of the next digital revolution, with Texas leading the charge. It’s a bit of friendly competition.”

One significant obstacle that states like Texas encounter in advancing strategic reserve legislation, Erben explained, is that many local governments do not accept Bitcoin as a recognized currency.

“The state banking department does not classify virtual currencies as currency, so they don’t regulate it accordingly,” Erben stated. “The only virtual currency that the state considers as a monetary transmission in Texas is a third-party exchange or stablecoin.”

However, crypto-friendly states like Florida have also rearranged their legislative priorities to make the establishment of a Bitcoin strategic reserve a key focus.

“Had Kamala Harris won, we would have been in a position to defend against crypto being driven out of the U.S.,” said Samuel Armes, president of the Florida Blockchain Business Association. “But now we can be proactive, exploring ways to encourage the state government to invest in these assets.”

President Trump and Senator Cynthia Lummis initially presented the concept of a national strategic Bitcoin reserve during an industry conference in Nashville last July. Lummis’s proposal, endorsed by the Wyoming Republican, calls for the U.S. to acquire 1 million Bitcoin, while Trump’s plan includes maintaining ownership of the approximately 200,000 tokens already in U.S. possession following asset seizures. This initiative is part of a broader promise made by the president-elect’s campaign to position the U.S. as the “crypto capital of the planet.”

Erben emphasized that state legislatures convene infrequently and for short durations. Texas holds sessions biennially rather than annually, meaning that lawmakers must allocate time to address pressing issues like school funding and electric grid improvements in the next five months. Convincing legislators to support initiatives related to what many still view as emerging technology complicates the process, according to Erben.

“Legislators prefer not to vote on novel concepts,” Erben remarked. “They’d be comfortable letting the federal government handle the situation with virtual currencies; still, they would like to see success in other areas before taking it on themselves.”

Dennis Porter, the Portland, Oregon-based founder of the non-profit Bitcoin advocacy group Satoshi Action Fund, claims to be a significant influencer in advancing strategic Bitcoin reserve legislation in several states. Founded in 2022, Porter stated to Bloomberg News that his organization has “significantly increased our efforts to advocate for states purchasing Bitcoin” following the November elections by collaborating with local legislators to propose reserve bills.

However, advocating for legislation is not synonymous with successfully passing it, according to Dominic Folino, founder of the Pennsylvania Blockchain Association. In November, Pennsylvania Representative Mike Cabell proposed a bill, aided by the Satoshi Action Fund, which would allow up to 10% of Pennsylvania’s Treasury reserves to be allocated to Bitcoin—but only after he lost his bid for re-election. Folino noted that the presence of outside entities has impeded the state’s ability to push for effective crypto legislation, especially in a state with a history of being less crypto-friendly.

“Having a thoughtful strategy from Pennsylvanians regarding a reserve bill is one thing, while having someone from Oregon come in with a ready-made bill is another,” Folino remarked. “Just because a piece of legislation is introduced doesn’t guarantee its passage.”

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