Interest in Crypto Heats Up in State Capitols

These are heady days for enthusiasts of bitcoin and other cryptocurrencies and digital assets.

President Trump has declared himself the “crypto president,” unleashing a surge of crypto-friendly proposals at the state and federal levels at a time when bitcoin closed the month of January at a record high.

As we predicted in December, several states are already looking to follow the Trump Administration’s lead and establish their own bitcoin reserves.

Originally, Pennsylvania appeared as though it would be a pioneer in this space. Former Pennsylvania Rep. Mike Cabell (R) introduced a bill in November to authorize the state treasurer and public pension funds to invest in bitcoin, but the measure didn’t move forward before the session ended.

Cabell, a bitcoin enthusiast, lost his bid for re-election that month. But he told the Associated Press in January that he expects a colleague to reintroduce the reserve legislation.

In the meantime, several other measures have cropped up:

• Arizona SB 1373, by Sen. Mark Finchem (R), would establish a “digital assets strategic reserve fund” in the Grand Canyon State.

• Illinois HB 1844, by Rep. John M. Cabello (R), would create a strategic bitcoin reserve in the Land of Lincoln.

• Ohio HB 18, by Rep. Steve Demetrious (R), and SB 57, by Sen. Sandra O’Brien, would both establish cryptocurrency reserves in the Buckeye State.

• In Oklahoma, HB 1203, by Reps. Cody Maynard (R) and Avery Frix (R), would establish a strategic bitcoin reserve.

• In Texas, where Lt. Gov. Dan Patrick (R) recently said that establishing a bitcoin reserve was a top priority for him, HB 1598, by Rep. Giovanni Capriglione (R), and SB 778, by Sen. Charles Schwertner (R), would accomplish that task.

And that might just be the beginning. Fortune magazine reported in late January that as many as 15 states may be considering establishing bitcoin reserves now with Trump in the White House.

As Fortune reported, some state legislators are intrigued by the idea because it could diversify states’ financial portfolios, which is a reasonable goal under any circumstances, but a particularly attractive proposition now as bitcoin values soar.

President Trump is also laying his finger on the scale, ordering the establishment of a digital asset working group to look into stockpiling cryptocurrencies at the federal level.

“The strategic reserve debate mirrors the nuclear arms race of the 20th century in both its destructive potential and competitive nature,” wrote Susie Violet Ward, a “bitcoin journalist,” in Forbes magazine in January. “Countries that fail to act risk being sidelined as bitcoin becomes ingrained into the financial system.”

Legislators Aren’t Just Considering Bitcoin Reserves

Strategic reserves represent just a fraction of the crypto-related bills that have been introduced in state legislatures since the beginning of the year.

According to State Net® data, 145 bills concerning digital assets or cryptocurrencies have been considered in 33 states. Only about a dozen address strategic bitcoin or digital asset reserves. The others cover a variety of issues. The measures include:

• Arkansas SB 60, by Sen. Ricky Hill (R), which would prohibit a digital asset mining business from being located within a 30-mile radius of a military facility.

• Connecticut HB 5237, by Rep. Jaime Foster (D), which would define digital currency in the penal code and allow for the pre-conviction confiscation of digital wallets associated with thefts. Foster is also leading a large group of Connecticut lawmakers in authoring HB 6651 to make it easier to prosecute cryptocurrency theft in the Constitution State.

• Massachusetts HB 312, by Rep. Kate Lipper-Garabedian (D), which would create a special commission on blockchain and cryptocurrency.

• Montana HB 263, by Rep. Katie Sullivan (D), which would require digital asset data mining operations to report their electricity use.

• New York companion measures AB 213, by Assemblyman Clyde Vanel (D), and SB 3985, by Sen. Kevin S. Parker (D), which would establish a task force to study whether the Empire State should issue its own cryptocurrency. 

“Legislatures are entering busy sessions that could significantly impact the regulatory landscape for digital assets,” said the online legal information source JD Supra in January.

Crypto Measures Flooding State Legislatures

So far this year, at least 145 measures referring to cryptocurrencies or digital assets have been taken up in 33 states, according to the LexisNexis® State Net® legislative tracking system. Eleven measures in nine states deal with strategic bitcoin or digital asset reserves.

Along with Crypto Enthusiasm Also Some Hesitancy

Despite all the hype around cryptocurrencies, and bitcoin in particular, some state officials may be hesitant to jump on the bitcoin bandwagon.

Keith Brainard, research director for the National Association of State Retirement Administrators, has been quoted as saying he doesn’t expect public pension fund investment managers to invest in cryptocurrencies, in part because they have a short track record.

Meanwhile, Louisiana State Treasurer John Fleming, who made the Bayou State the first in the nation to accept cryptocurrencies as payment for government services, recently said he’s not sure bitcoin is a good investment.

Then again, the interest around the issue is undeniable, with Cabell, the former Pennsylvania lawmaker, saying a colleague told him he had received more calls and emails about cryptocurrency legislation than for any other issue.

With the money involved, and the president’s interest, you can bet cryptocurrency will remain a hot topic under capitol domes across the country.

—By SNCJ Correspondent BRIAN JOSEPH

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