Bitcoin: A Strategic Reserve Asset for US State Treasuries
In a bold move towards modernizing state treasury management, the Bitcoin Policy Institute (BPI) has unveiled a comprehensive 30-page model bill advocating for Bitcoin (BTC) to be recognized as a strategic reserve asset. This initiative aims to formalize the use of Bitcoin in state treasuries, detailing aspects from multisignature custody to the establishment of tax-advantaged economic zones. Titled the “State-Level Strategic Bitcoin Reserve Toolkit,” this document emerges amidst the growing institutional embrace of digital assets and seeks to guide states in diversifying their treasury holdings, safeguarding against currency devaluation, and enhancing fiscal sustainability. The authors describe this venture as a revolutionary shift in monetary technology.
The Rationale for Holding 3% in Bitcoin
Authored by BPI’s head of policy, Zack Shapiro, alongside research associate Zack Cohen, the toolkit underscores that current fiduciary mandates already empower state treasurers to incorporate Bitcoin into their portfolios. The document encourages lawmakers to capitalize on the competitive edge offered by digital assets, urging states to create a Strategic Bitcoin Reserve (SBR). This reserve would be entirely secured in cold storage and managed through a Multi-Institution Custody system, distributing control keys among three to seven independent entities. This structure ensures that no single institution, custodian, or individual can unilaterally control the state’s Bitcoin assets.
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Financial Allocation and Management
The proposal mandates that each state allocate at least three percent of the General Operating Fund’s average daily balance from the previous fiscal year towards annual Bitcoin investments. Additional inflows can stem from seized assets, cryptocurrency tax payments, and a new category of tax-exempt Municipal BitBonds. The acquired Bitcoin must be held for a minimum of twenty years, barring exceptional legislative intervention, and is prohibited from being lent, rehypothecated, or involved in derivative contracts.
Ensuring Transparency and Oversight
To maintain transparency, Section 5 of the bill introduces a real-time Proof-of-Reserves framework. This requires the treasury to publish cryptographic signatures, wallet addresses, and balance updates within an hour of any significant changes, enabling public access to ongoing on-chain insights into state funds. Additionally, biennial reports are required to supplement on-chain data with cost basis analysis, performance reviews, and incident disclosures. Oversight is provided by a seven-member Strategic Bitcoin Reserve Advisory Committee, comprising representatives from the governor’s office, legislature, pension system, academia, and banking sector. The legislative audit division retains the authority to conduct program reviews at least once every three years.
Expanding Beyond Financial Diversification
Beyond enhancing balance-sheet diversification, the bill also proposes industrial policies. It authorizes the creation of Bitcoin Tax-Advantaged Zones, offering capital-gains exemptions, sales-tax relief on mining hardware, and payroll-tax rebates for firms generating at least 60% of their revenue from Bitcoin activities. Furthermore, Bitcoin mining is positioned as a tool for emissions mitigation, with state agencies directed to focus on stranded energy, flare-gas capture, and renewable-grid balancing. At least five percent of mining proceeds would be allocated to a dedicated conservation fund.
Implementation Timeline and Security Measures
The drafters advocate for an assertive implementation timeline. Within 90 days of the bill’s enactment, a state treasury would need to make its initial Bitcoin purchase. Full operational capacity, including custody infrastructure, insurance, and reporting systems, must be achieved within 120 days. Continuous disaster-recovery simulations and cyber-incident protocols are crucial components of the reserve’s security framework.
Current Adoption and Future Prospects
Remarkably, three US states have already enacted legislation to establish a strategic Bitcoin reserve. On May 6, 2025, New Hampshire set the precedent when Governor Kelly Ayotte signed HB 302, permitting the treasurer to allocate up to five percent of specific state funds to Bitcoin and other digital assets. Arizona followed suit on May 7, 2025, with HB 2749, establishing a Bitcoin and Digital Assets Reserve Fund within the treasurer’s office to manage abandoned or seized cryptocurrency in-kind rather than liquidate it. Texas joined on June 20, 2025, as Governor Greg Abbott approved SB 21, the Texas Strategic Bitcoin Reserve and Investment Act, granting the comptroller explicit authority to purchase and custody Bitcoin for the state.
Bitcoin’s Market Position
At the time of writing, Bitcoin is trading at $111,111, reflecting its significant market presence and potential as a strategic asset.
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