In a strategic move to strengthen public finances, Representative Logan Manhart introduced a bill this week to establish a state Bitcoin reserve in South Dakota. The proposal, named HB 1155, emerges as a second legislative attempt following the rejection of a similar measure last year, now seeking a much more aggressive capital allocation for the state’s investment funds.
This project would allow the South Dakota Investment Council to allocate up to 10% of its assets, which currently stand at around $20.56 billion, to the market’s leading cryptocurrency. According to Manhart, this initiative is necessary because the current returns of 5.5% are significantly below the target of 12.5% set by the state’s financial authorities.
Through his social media, the Republican lawmaker defended the proposal under the premise that “strong money” guarantees a “strong state,” linking the adoption of digital assets with the long-term stability of the education and health systems. However, the success of the state Bitcoin reserve will depend on overcoming the resistance of committees that previously blocked initiatives of a similar nature.
Expansion of the digital asset model in American state treasuries
The trend of integrating crypto assets into public coffers is not exclusive to South Dakota, as nearly 30 states have explored legislation related to strategic reserves. Furthermore, the political momentum has been favored by the pro-crypto federal environment, where figures like Donald Trump have encouraged local lawmakers to diversify their investment portfolios through the use of decentralized and secure technologies.
On the other hand, the proposed regulations demand extremely rigorous security protocols, including the use of encrypted hardware and multi-signature governance in geographically separated locations. Thus, the state Bitcoin reserve would have a professional custody framework that would minimize the risks of loss or hacking, allowing investment in both direct assets and exchange-traded products (ETFs).
Will South Dakota be able to join the select group of states that already allow investments in crypto assets?
So far, only Texas, Arizona, and New Hampshire have managed to enact laws authorizing the holding of digital assets in their sovereign funds or seized property. However, South Dakota’s case is unique due to the urgent need to improve the performance of its retirement fund, which has shown signs of lagging behind the benchmarks of global capital markets.
Ultimately, the passage of this law would represent a milestone for the institutional adoption of blockchain in the U.S. public sector. The committee debate is expected to determine if the state is ready to assume the inherent volatility of Bitcoin in exchange for a growth potential that traditional investments in fixed income and public equities have failed to deliver in the last fiscal cycle.
