In the United States, where Bitcoin enthusiasm is on the rise with an estimated one in five Americans owning some BTC, three states – Texas, Ohio, and Pennsylvania – are taking steps towards creating local Bitcoin reserves. These state-level initiatives come as the U.S. President promotes the idea of a strategic national Bitcoin reserve, and each has its own unique characteristics compared to federal proposals.
Introduced in July 2024 by Wyoming Sen. Cynthia Lummis, the Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act aims to pay down the U.S. national debt. Lummis, in the bill’s introduction, also highlights soaring inflation rates, comparing the creation of the Bitcoin reserve to the historic Louisiana Purchase.
The proposal views Bitcoin as an additional store of value on the federal balance sheet. It suggests the government establish a U.S. Treasury – controlled decentralized network of Bitcoin vaults and purchase one million BTC, approximately 5% of the total supply – a figure inspired by the U.S. already holding 5% of all gold. The bill also grants private Bitcoin holders self – custody rights.
Introduced on Dec. 12 by Texas State Representative Giovanni Capriglione, the Texas bill focuses on accumulating bitcoins through alternative means. Local residents will be able to pay taxes and donate cryptocurrency to the state, with all received crypto being exchanged for Bitcoin. The accumulated BTC must be stored offline and untouched for at least five years. Capriglione, like Lummis, pointed to inflation as a major concern when discussing the need for a Bitcoin reserve. However, the implementation may face challenges. As noted by Centrifuge general counsel Eli Cohen in a Dec. 24 CNBC interview, tax authorities may struggle to collect taxes in BTC and identify taxpayers, and taxpayers may be reluctant to provide their BTC wallets.
On Dec. 17, Rep. Derek Merrin introduced the Ohio Bitcoin Reserve Act. The bill suggests the Ohio treasury set up a Bitcoin fund to invest in Bitcoin as a hedge against USD devaluation. Unlike the Lummis proposal, it does not mention specific Bitcoin purchases or allocations. With Ohio having a $72.16 billion debt in 2022, the BTC reserve could potentially assist in debt redemption. The bill will be further deliberated by legislators in 2025.
The Pennsylvania bill, introduced in November, proposes that the state can invest up to 10% of the State General Fund in Bitcoin to combat inflation. This could mean spending nearly one billion dollars on bitcoins.
The likelihood of these bills becoming law is uncertain. On average, only 20% of state – level bills pass, and in Texas, Ohio, and Pennsylvania, the success rate is even lower, with only 4.5% of bills introduced to the 115th Congress becoming law. While Lummis is a strong Bitcoin advocate and her bill has some support, it also faces criticism within the crypto community. For example, Nic Carter warns that a strategic Bitcoin reserve could undermine the dollar’s value, as it signals a move away from the fiat standard.
If the federal strategic Bitcoin reserve isn’t created but the state – level reserves are established, these states could become international cryptocurrency hubs, leading the way in exploring governmental Bitcoin accumulation and storage. Even if all these bills fail, it’s likely that new proposals will follow.
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