Three American states are on the verge of establishing local Bitcoin reserves, each showcasing unique approaches that differ from the national Bitcoin Reserve initiative.
The enthusiasm for Bitcoin is palpable across the United States, with reports indicating that one in five Americans owns some form of the cryptocurrency. As the push for a strategic national Bitcoin reserve intensifies, states like Texas and Ohio are moving closer to finalizing their own local reserves, with Pennsylvania following suit and others still in deliberation.
How Do Local Proposals Differ from the Federal Bill?
The local proposals focus on different objectives compared to the federal initiative. While the federal plan aims to address the national debt with a plan to purchase one million Bitcoin to be stored in the U.S. Treasury, state-level bills aim for a more localized approach not necessarily tied to debt elimination.
For instance, the Texas bill outlines a plan to amass Bitcoin through tax collection and donations, implementing a five-year prohibition on the sale of any acquired Bitcoin. Ohio and Pennsylvania are positioning Bitcoin as a safeguard against the declining value of the dollar, with purchases set to be made by local treasuries, although precise details in the bills remain sparse.
Overview of the Lummis Bill
Wyoming Senator Cynthia Lummis introduced a federal bill in July 2024, titled the BITCOIN Act, aimed at addressing the national debt through strategic Bitcoin investment. Lummis highlights rising inflation as a pressing concern, likening the establishment of a national Bitcoin reserve to the historic Louisiana Purchase.
The Lummis proposal envisions Bitcoin as an asset on the federal balance sheet, advocating for a decentralized network of Bitcoin vaults controlled by the U.S. Treasury, with plans to acquire one million Bitcoin, aligning with historical gold holdings. Additionally, the bill aims to grant self-custody rights to private Bitcoin holders.
Details on Local Bills
In contrast, the local bills do not outline specific Bitcoin acquisition targets or debt-reduction plans. The Texas bill, introduced by State Representative Giovanni Capriglione, enables residents to pay taxes and make donations using cryptocurrency, which will then be converted into Bitcoin. Accumulated Bitcoin must remain untouched for a minimum of five years, as Texas aims to tackle inflation through this new reserve. The state has become a favored destination for Bitcoin miners due to its low energy costs.
On December 17, Ohio Representative Derek Merrin proposed the Ohio Bitcoin Reserve Act, allowing the state treasury to invest in Bitcoin as a hedge against the depreciating dollar. Unlike the Lummis proposal, this bill does not specify any mandatory purchases. Notably, Ohio grapples with a significant $72.16 billion debt, making this move potentially pivotal in its financial strategy, although further legislative work is expected in 2025.
Moreover, Pennsylvania’s bill, introduced in November, permits the state to allocate up to 10% of the State General Fund toward Bitcoin investments, potentially providing nearly one billion dollars for this purpose as a countermeasure against inflation.
Prospects for Passage
While these bills have been introduced, their passage remains uncertain. Statistically, only about 20% of state-level bills become law, with even lower rates observed in Texas, Ohio, and Pennsylvania. The success of these initiatives will hinge on various factors, including lobbying efforts. Observers recognize Senator Lummis as a strong proponent of Bitcoin, suggesting her bill may have a favorable chance, despite facing its share of criticism.
Some experts caution that while accumulating Bitcoin might provide a strategic advantage, it may also undermine the dollar’s value, raising concerns about the overall economic implications. However, mainstream sentiment does not seem to align with such apprehensions. If successful, these local reserves could establish critical frameworks for government Bitcoin accumulation and management, potentially positioning these states as leaders in cryptocurrency initiatives.
