America Is Bullish on Bitcoin: Three States Expected to Create Local Bitcoin Reserves Soon

The bills differ from the proposal of the American National Bitcoin Reserve and demonstrate local specifics.

Three U.S. states are set to introduce local Bitcoin reserves soon. The bills differ from the American National Bitcoin Reserve proposal and have their own local specifics.

America is bullish on Bitcoin. Allegedly, each fifth American owns some BTC. While the U.S. President is pushing to create a strategic Bitcoin reserve, the states are working on local reserves. The Ohio and Texas proposals to create such reserves are about to pass; Pennsylvania is following their way, while other states are doing their considerations.

What are the specs of the local proposals compared to the federal bill?

The main distinction is that the local proposals have different end goals if compared to the federal-level proposal. The federal bill is aimed to cover the national debt and calls for purchasing one million BTC that should be stored in the U.S. Treasury.

The Texas bill is aimed at accumulating bitcoins by collecting taxes and donations in cryptocurrency. More than that, Texas has a minimum five-year embargo on selling state bitcoins. Ohio and Pennsylvania are willing to accumulate some BTC as a hedge against the eroding USD value. Bitcoins must be bought by the local treasuries. The bills don’t elaborate precisely on the terms.

The Cynthia Lummis bill

The Federal Reserve bill was introduced in July 2024 by Wyoming Sen. Cynthia Lummis. Her proposal is called Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act. The Lummis bill is expressly presented as a means to pay down the U.S. national debt.

Apart from national debt, Lummis mentions soaring inflation rates in the introduction and calls the creation of the reserve a Louisiana Purchase moment. Comparing huge-scale Bitcoin purchases with buying American lands in the past became a popular trope among Bitcoin maximalists.

According to the Lummis proposal, Bitcoin is seen as an additional store of value in the federal balance sheet. The bill suggests that the government must establish a U.S. Treasury-controlled decentralized network of Bitcoin vaults. On top of that, the government must purchase one million BTC, which is around 5% of the total supply. The amount is dictated by the fact that the U.S. is already holding 5% of all gold. Private Bitcoin holders should be given self-custody rights.

The local bills

The local bills of Texas and Ohio don’t include direct intentions to purchase a specified amount of BTC in a certain period, nor are they intended to eliminate the state debts.

The Texas bill was introduced by Texas State Representative Giovanni Capriglione on Dec. 12. The bill suggests that local residents will be able to use cryptocurrency to pay their taxes. On top of that, Texans will be able to donate cryptocurrency to the state. All the crypto is going to be exchanged for Bitcoin.

Donations, taxes, and other payments to the state agencies will be the main avenues for Texas to accumulate bitcoins. The accumulated BTC are supposed to be stored offline untouched for at least five years. Just like Lummis, Capriglione mentioned inflation as one of the biggest enemies while speaking about the need for the Bitcoin reserve. Texas has been an attractive place for Bitcoin miners due to low electricity costs and various incentives.

During the CNBC interview released on Dec. 24, Centrifuge general counsel Eli Cohen noted that the implementation may turn out to be challenging. He points out that the tax authorities may find it tricky to collect taxes in BTC and identify taxpayers. If the tax authorities demand taxpayers to provide their BTC wallets, the taxpayers may feel reluctant to obey.

On Dec. 17, the rep. Derek Merrin introduced the Ohio bill known as the Ohio Bitcoin Reserve Act. The act suggests that the Ohio treasury will set up the Bitcoin fund and will be able to invest money in Bitcoin. Bitcoin is seen as a hedge against USD devaluation. In contrast to the Lummis proposal, the bill has no mention of specific Bitcoin purchases or allocations. In 2022, Ohio had a $72.16 billion debt. It is possible that the BTC reserve could facilitate debt redemption. The bill will be worked upon further by legislators in 2025.

The Pennsylvania bill was introduced back in November. Its prime suggestion is that the state will be able to invest up to 10% of the State General Fund in Bitcoin in order to fight inflation. This means that nearly one billion dollars can be spent on bitcoins.

Will these bills pass?

The bills mentioned above were introduced. There is no guarantee that they will pass. On average, only 20% of the introduced state-level bills become laws. In Texas, Ohio, and Pennsylvania, this number is even lower. According to the New Healthcare Bill Acts, only 4.5% of the bills introduced to the 115th Congress became law. So, statistically, the odds are not that high. Practically, it depends on multiple factors, not least of all the persistence