On Thursday, lawmakers in South Carolina unveiled the “Strategic Digital Assets Reserve Act,” a proposed legislation that would empower the state treasurer to invest in Bitcoin and other digital assets up to designated limits.
The bill, referred to as H4256, authorizes the state treasurer to allocate unexpended funds from the General Fund, Budget Stabilization Reserve Fund, and other investment funds managed by the state into digital assets.
Investment is set to be limited to 10% of the total funds under management, with a maximum cap of one million Bitcoins allowable in reserves.
According to the proposed legislation, digital assets must be securely held either by the state treasurer through a reliable custody solution, by a qualified custodian, or within exchange-traded products provided by regulated financial entities. The bill explicitly forbids the lending of digital assets.
The legislation notes, “Bitcoin, as a decentralized digital asset, along with other digital assets, presents unique characteristics that can serve as a hedge against inflation and economic fluctuations. Additionally, it aids in diversifying the state’s financial portfolio.”
Furthermore, the bill mandates biennial reporting on the state’s digital asset holdings and their corresponding US dollar values.
To enhance transparency, the public addresses of all digital assets must be disclosed on an official state website. The state treasurer is also required to conduct regular independent testing and auditing of the management processes for digital assets.
The bill permits residents of South Carolina to donate digital assets to the reserve via an approved vendor process. If passed, the legislation will remain effective until September 1, 2035.
Through this initiative, South Carolina aligns itself with a growing number of US states looking into the creation of strategic crypto reserves. Currently, 24 out of 50 US states have presented bills concerning Bitcoin reserves, according to Bitcoin Law.
Prior to H4256, South Carolina lawmakers had proposed S0163, which is centered on digital asset regulation. This legislation aims to prevent governmental entities from accepting or mandating central bank digital currency (CBDC) payments.
It will also facilitate the use of digital assets for transactions without imposing specific crypto mining taxes or zoning limitations.
Moreover, S0163 addresses issues related to cryptocurrency mining, such as energy consumption and noise, while also promoting rural development through mining initiatives.
