Author: AY FundInsight
At the intersection of cryptocurrency and the traditional financial world, a new legislative proposal is sparking widespread discussion. This draft, named the (2025 Bitcoin Strategic Reserve Bill), 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 taken in the context of an increasingly uncertain global economy to combat inflation and enhance financial resilience.
1. Bitcoin: The state's new 'gold'?
With the rise of Trump, Aiying previously detailed in articles the (U.S. Bitcoin Strategic Reserve Bill): purchasing 200,000 Bitcoins annually, reaching 1 million within five years, which is closer to reality, and has even proposed the (2025 Bitcoin Strategic Reserve Bill), aiming to authorize state treasury officials to incorporate Bitcoin into financial reserves to guard against asset depreciation due to inflation.
Of course, Aiying reviews that there have been many significant strategic acquisitions in U.S. history, such as the acquisition of Manhattan, the Louisiana Purchase, and the purchases of California and Alaska in the 19th century, which brought trillions of dollars in returns to the U.S. These acquisitions initially seemed risky but ultimately proved to be of great contribution to the U.S. economy and strategic position.
The same logic can be applied to today's potential acquisition 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 of the digital age, has attributes 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, extending its financial dominance into the new era of the digital economy.
In the first part of the (2025 Bitcoin Strategic Reserve Bill), legislators clearly state that inflation has severely eroded the purchasing power of state finances and retirement funds, affecting residents' economic well-being. Although state governments cannot control 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 placed on the agenda. Data shows that Bitcoin's market capitalization has rapidly soared in the past 16 years, now exceeding $1 trillion, which undoubtedly proves its potential in combating inflation.
2. Resilience and Innovation: What is the intention behind the new legislation?
In the draft, state governments plan 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 rapidly to market changes through flexible investment policies to enhance returns.
Ensure that investment strategies align with the goal of enhancing state economic security and financial resilience.
The bill emphasizes flexibility. In the context of an increasingly complex and fast-changing global economy, traditional investment models often appear too rigid, while the introduction of digital assets like Bitcoin provides more diverse options for investment portfolios, enabling state governments to better respond to market risks.
3. Secure Custody: Safeguards for digital assets
In the holding and management of digital assets, the draft imposes strict security requirements. Specifically, the custody methods for Bitcoin include three types: direct holding by the state treasury, holding by a qualified custodian, or holding through registered exchange-traded products (ETPs). At the same time, to ensure the security of digital assets, the draft proposes a 'secure custody solution' — requiring private keys to 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 move aims to eliminate public concerns about the security of digital assets and ensure their security and stability in custody and management.
Specifically, the 'secure custody solution' includes the following measures:
Exclusive Control of Private Keys: 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 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 subject to strict approval and record-keeping.
Disaster Recovery Mechanism: Custody service providers must have a sound disaster recovery mechanism to ensure that the state government can still access and manage assets if the provider is unable to perform its duties.
Regular Code Audits: Custody solutions must undergo periodic code audits and penetration tests by auditing firms and promptly fix any identified vulnerabilities.
4. Bitcoin Tax: A new source of funding for public services?
The fifth part of the bill deals with the payment methods for taxes and fees. According to the draft, taxes and fees paid in Bitcoin will be transferred to the state general fund, which will compensate the corresponding digital asset account in dollars. This arrangement not only ensures the flexible utilization of funds but also significantly increases the acceptance of Bitcoin at the state level.
Specifically, the process of paying taxes with Bitcoin is as follows:
Tax Payment: Taxpayers can use Bitcoin to pay taxes, and these Bitcoins will first enter the state general fund account.
Capital Conversion: The state general fund will be compensated in an equivalent dollar amount to the designated digital asset account to ensure financial balance.
Transparent Management: Through blockchain technology, the income and expenditure process of Bitcoin will be made public and transparent, reducing the risks of corruption and abuse of funds.
In addition, the draft also allows state retirement funds to invest in registered digital asset exchange products, further enriching the investment channels. These measures indicate that Bitcoin may not only serve as a tool against inflation but also become part of the funding sources for public services, gradually integrating into people's daily lives.
5. Behind the Legislation: An Experiment in Financial Innovation
The (2025 Bitcoin Strategic Reserve Bill) is undoubtedly an unprecedented attempt and a microcosm of financial system modernization. With Pennsylvania passing the 'Bitcoin Rights' bill, the introduction of this strategic reserve bill seems logical and has far-reaching significance. As an advocate for Bitcoin, Satoshi Action Fund aims to promote the application of Bitcoin in broader fields through such legislation, providing lawmakers with a perspective to understand blockchain technology and helping them seize opportunities in the digital age during the policy-making process.
Of course, to address the high volatility risks of Bitcoin, the draft proposes some risk control measures:
Investment Cap: The state treasury's investment in Bitcoin shall not exceed 10% of the total amount of the related fund to prevent excessive reliance on a single asset.
Asset Lending: Without increasing financial risk, the state treasury can obtain additional income by lending Bitcoin, but must adhere to rules set by state treasury officials.
Diversified Investment Strategy: Encouraging state governments to continue investing in other traditional financial assets while introducing Bitcoin to ensure the stability of the overall investment portfolio.
For this proposal, whether it can be widely accepted and implemented ultimately depends on discussions and evaluations by state governments and the public. However, it is undeniable that the idea is quite worth referencing.
In summary, the (2025 Bitcoin Strategic Reserve Bill) is ambitious, attempting to enhance the resilience and flexibility of public funds by incorporating the emerging digital asset Bitcoin into the state financial system. Behind the legislation, there 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 investments and financial innovations remains to be seen. Aiying FundInsight will continue to support Web3 and traditional financial institutions, helping them navigate this unprecedented transformation and innovation with stability.
Draft Link: https://www.satoshiaction.io/sbr
