A new bill introduced in South Carolina proposes the creation of a state-run Bitcoin reserve with a cap of 1 million BTC.
With its submission on March 27, the Strategic Digital Assets Reserve Act of South Carolina proposes to grant the state treasurer the right to retain Bitcoin and other digital assets as a hedge against inflation.
According to the bill, the purchasing power of retirement savings and assets controlled by the state has decreased as a result of inflation. To safeguard its financial resources, South Carolina is working to diversify them.
As a potential hedge against the volatility of the economy, bitcoin is being considered. The proposed Digital Assets Reserve would make it possible for the state to hold and control Bitcoin, and it would also make it possible for residents of South Carolina to voluntarily donate digital assets with their money.
By regulating safe storage through cold wallets or qualified custodians and capping holdings of digital assets at 10% of total money under control, the bill establishes clear parameters for investments at the same time.
Additionally, the bill limits the state’s possession of Bitcoins to a maximum of one million at any given time. In the event that this bill is approved, the state treasurer of South Carolina would be granted the authority to invest in the reserve any money that is not being used or committed from sources such as the General Fund and the Budget Stabilization Reserve Fund.
To fulfill the requirements of maintaining transparency and providing residents with the ability to verify transactions, the state treasurer would be compelled to make public addresses of the reserve’s holdings.
The suggestion comes at a time when South Carolina is making efforts to change its position on the regulation of cryptocurrencies. Coinbase’s chief legal officer, Paul Grewal, disclosed the news on X on March 27 about the state’s decision to withdraw its lawsuit against Coinbase’s staking services.
This decision paves the road for the exchange to resume staking for residents of the state. Grewal pointed out that users in South Carolina lost approximately $2 million in staking incentives as a result of the legal battle, and he praised the dismissal of the lawsuit as a victory for consumer rights.
He made the point that there are 52 million people in the United States who own cryptocurrency and that there is a need for clear rules and consumer protections. Grewal expressed his admiration for South Carolina’s action and expressed his hope that other jurisdictions that have prohibitions on stakes will follow suit.
