Surge in State Interest for Crypto Investments

This year’s rapid surge in U.S. states’ interest to put public money into cryptocurrencies before the federal government can establish a strategic reserve of digital assets has encountered mixed results after five such efforts flamed out. Utah remains a single vote away from the finish line, while Texas reportedly advanced a bill to its state Senate.

Pennsylvania, Wyoming, Montana, South Dakota, and North Dakota have fallen short in their legislative efforts to put public funds into crypto. Others, notably Utah, have made significant progress toward passing bills that could tie their financial health to the digital assets market, and the ground is shifting by the hour.

The U.S. Congress and President Donald Trump have made noise about a federal strategic digital assets reserve, with the idea’s public campaign stemming from the Bitcoin 2024 stage in Nashville, Tennessee, before Trump won his election. Trump has expressed broad support, alongside advocates like MicroStrategy’s Michael Saylor and Senator Cynthia Lummis, who leads the crypto subcommittee of the Senate Banking Committee.

Many states raced to act before the federal government. However, the market value of Bitcoin (BTC), the primary asset discussed in these initiatives, has dropped considerably since the post-election enthusiasm, diminishing the momentum for state involvement.

> Read More: U.S. Bitcoin Reserve May Be Coming, But States Are Winning the Race

Bitcoin’s price fell from a high of $106,000 on inauguration day to around $86,000. This decline coincided with a high-profile hack of the Bybit exchange, which stole more crypto than previously recorded. Such setbacks have dampened state-level enthusiasm.

Johnny Garcia, managing director at VeChain Foundation, noted that the urgency around these initiatives has decreased. “States have some breathing room to assess a way forward,” he said.

Montana and North Dakota clearly lost when their legislatures rejected the idea of state-level crypto reserves. The other states saw similar rejections at the committee level.

Meanwhile, Utah’s legislation allowing crypto investments of up to 5% of certain public accounts has passed the state house and a senate committee, but a final vote is uncertain.

Dennis Porter, CEO of the Satoshi Action Fund, remarked, “Although Utah seems best positioned to finalize its bill first, nothing is guaranteed. It’s a dynamic process.” Porter suggested the campaign is treating states as “laboratories of democracy,” acknowledging that most bills will likely fail but his group will continue pushing yearly.

Texas, a major bitcoin mining hub, has also moved a crypto reserve bill out of committee. However, the variety of digital asset initiatives across states suggests a lack of unified effort. Some states are focusing on other aspects, such as Indiana’s bill for blockchain efficiency and Arizona’s technical bill to manage unclaimed property in crypto.

While North Dakota’s reserve effort failed, the state house approved a resolution encouraging the treasurer to invest certain state funds in digital assets, now sitting with the state senate.

Garcia predicts that many states will likely authorize digital assets for their pension and investment options before adopting more aggressive digital asset reserves.