Author: AY FundInsight
At the intersection of the cryptocurrency and traditional finance worlds, a new legislative proposal is sparking widespread discussion. The draft, titled (the 2025 Bitcoin Strategic Reserve Act), was drafted by the Bitcoin advocacy organization Satoshi Action Fund, aiming to incorporate Bitcoin as a strategic reserve tool into the financial systems of U.S. states. This is not only an unprecedented attempt but also a bold step forward in combating inflation and enhancing financial resilience against the backdrop of an increasingly uncertain global economy.
One, Bitcoin: The state's new 'gold'?
With Trump's rise to power, Aiying's previous article detailed (the U.S. Bitcoin Strategic Reserve Act): purchasing 200,000 bitcoins annually, reaching 1 million within five years is one step closer to reality, and even proposals (the 2025 Bitcoin Strategic Reserve Act) have been made, aiming to authorize state treasurers to include Bitcoin in financial reserves to hedge against asset depreciation caused by inflation.
Of course, Aiying recalls that there have been several significant strategic acquisitions in U.S. history, such as the purchase of Manhattan, the Louisiana Purchase, and the 19th-century acquisitions of California and Alaska, all of which brought trillions of dollars in returns to the U.S. These acquisitions initially seemed risky but ultimately proved to be a huge contribution to the U.S. economy and strategic position.
The same logic can be applied to today's potential acquisitions of Bitcoin. As a forward-looking strategic asset, Bitcoin possesses scarcity and long-term appreciation potential similar to historically significant resources. Historically, the U.S. expanded its territory, economic base, and strategic security by purchasing land and resources. Today, Bitcoin, as a strategic asset in the digital age, shares characteristics similar to traditional resources like gold and oil. By acquiring Bitcoin and incorporating it into state financial reserves, the U.S. can continue this historically successful experience and extend its financial dominance into the new era of the digital economy.
In the first part of (the 2025 Bitcoin Strategic Reserve Act), lawmakers clearly state that inflation has severely eroded the purchasing power of state finances and retirement funds, affecting the economic well-being of residents. Although state governments cannot control the federal monetary supply and macroeconomic policy, they have a responsibility to protect the financial health of the state. Therefore, Bitcoin, as an anti-inflation asset, has been brought to the agenda. Data shows that Bitcoin's market value has skyrocketed in the past 16 years, now exceeding $1 trillion, which undoubtedly proves its potential in combating inflation.
Two, Resilience and Innovation: What is the intent of the new legislation?
In the draft, the state government plans to legislate to allow Bitcoin and other digital assets to be included in the state treasury's investment portfolio as a means to combat inflation and economic uncertainty. The core goal of the legislation is:
Protect the purchasing power of state finances and prevent asset depreciation due to inflation.
Respond quickly to market changes through flexible investment policies to enhance returns.
Ensure that investment strategies align with the goals of enhancing state economic security and financial resilience.
The bill emphasizes flexibility. In an increasingly complex and rapidly changing global economy, traditional investment models often appear too rigid, while the introduction of digital assets like Bitcoin provides a more diverse range of options for investment portfolios, enabling state governments to better respond to market risks.
Three, Secure Custody: Safeguards for digital assets
In terms of holding and managing digital assets, the draft imposes strict security requirements. Specifically, the custody methods for Bitcoin include three types: direct holding by the state treasury, holding on behalf of the treasury through qualified custodians, or holding through registered exchange-traded products (ETPs). Simultaneously, to ensure the security of digital assets, the draft proposes 'Secure Custodial Solutions' — requiring that private keys be controlled solely by the government and stored in an encrypted environment, ensuring asset security through geographically dispersed data centers and multi-party governance structures. This aims to eliminate public concerns about the security of digital assets, ensuring their security and stability during custody and management.
Specifically, 'Secure Custodial Solutions' include the following measures:
Private Key Exclusive Control: Encrypted private keys must be held by government entities and can only be accessed in an end-to-end encrypted environment.
Geographically Dispersed Data Centers: The hardware devices for private keys must be stored in at least two geographically dispersed secure data centers to prevent risks from single-point failures.
Multi-Party Governance Structure: Authorization for each transaction must go through a multi-party governance structure to ensure that all transactions are strictly approved and recorded.
Disaster Recovery Mechanism: Custodial service providers must have a sound disaster recovery mechanism to ensure that the state government can still access and manage assets even if the provider is unable to fulfill its duties.
Regular Code Audit: Custodial solutions must undergo regular code audits and penetration testing by audit firms and timely fix any identified vulnerabilities.
Four, Bitcoin Taxation: A new source of funding for public services?
The fifth part of the bill pertains to the payment methods for taxes and fees. According to the draft, taxes paid with Bitcoin will be transferred to the state’s general fund, while the state fund will compensate the corresponding digital asset accounts in U.S. dollars. This arrangement not only ensures flexible use of funds but also signifies a significant increase in the acceptance of Bitcoin at the state level.
Specifically, the process for paying taxes with Bitcoin is as follows:
Tax Payment: Taxpayers can use Bitcoin to pay taxes, and these Bitcoins will first enter the state's general fund account.
Fund Conversion: The state's general fund will compensate the designated digital asset account with an equivalent dollar amount to ensure financial balance.
Transparent Management: Through blockchain technology, the income and expenditure process of Bitcoin is made public and transparent, reducing the risk of corruption and misuse of funds.
Additionally, the draft allows state retirement funds to invest in registered digital asset exchange products, further enriching investment channels. These measures indicate that Bitcoin is not only a tool for combating inflation but could also become part of the funding source for public services, gradually integrating into people's daily lives.
Five, Behind the Legislation: An experiment in financial innovation
(The 2025 Bitcoin Strategic Reserve Act) is undoubtedly an unprecedented attempt and a reflection of the modernization of the financial system. With Pennsylvania passing the 'Bitcoin Rights' bill, the introduction of this strategic reserve act appears logical and has far-reaching significance. The Satoshi Action Fund, as an advocate for Bitcoin, aims to promote Bitcoin's application in broader fields through such legislation, providing lawmakers with perspectives to understand blockchain technology and help them seize opportunities in the digital age during policy formulation.
Of course, to address the significant risks associated with Bitcoin's volatility, the draft proposes several risk control measures:
Investment Cap: The proportion of state treasuries' investment in Bitcoin must not exceed 10% of the total amount of relevant funds to prevent excessive reliance on a single asset.
Asset Lending: Without increasing financial risk, state treasuries can obtain additional income by lending Bitcoin, but must follow rules set by state treasurers.
Diversified Investment Strategy: Encourage state governments to continue investing in other traditional financial assets while introducing Bitcoin to ensure the stability of the overall investment portfolio.
Whether this proposal can ultimately gain widespread acceptance and be implemented remains to be discussed and evaluated by state governments and the public. However, it is undeniable that the idea is quite worth referencing.
In summary, (the 2025 Bitcoin Strategic Reserve Act) is ambitious, attempting to enhance the resilience and flexibility of public funds by incorporating Bitcoin, an emerging digital asset, into the state treasury system. Behind the legislation is an urgent need to promote financial modernization and a cautious prevention of emerging risks. Whether this experiment can succeed and provide a new paradigm for future government investment and financial innovation remains to be seen. Aiying FundInsight will continue to support Web3 and traditional financial institutions, helping them navigate this unprecedented transformative innovation.
Draft link: https://www.satoshiaction.io/sbr
