South Carolina lawmakers introduce a bill that would allow the state treasurer to invest in Bitcoin

South Carolina lawmakers on Thursday introduced the “Strategic Digital Assets Reserve Act,” a bill that would allow the state treasurer to invest in Bitcoin and other digital assets up to specific limits.

Lawmakers in South Carolina have unveiled a bill that could see the state treasurer investing in Bitcoin and other digital assets.

The legislation, also known as H4256, would permit the state treasurer to allocate a portion of the General Fund, Budget Stabilization Reserve Fund, and other state-managed investment funds to digital assets. However, it imposes specific limits and regulations on these investments.

Notably, the bill introduces a 10% cap on the total funds that could be invested in digital assets at any given time. Additionally, the state treasurer’s ability to accumulate Bitcoin is restricted to a maximum of one million BTC.

The digital assets would be held either directly by the state treasurer through a "purpose-built, fully integrated, and enterprise-grade custody solution," by a "qualified custodian" as defined in Section 3(c) of the Investment Company Act of 1940, or in exchange-traded products issued by a federal financial institution or the National Credit Union Administration.

The bill explicitly prohibits the lending of digital assets.

“Bitcoin, being a decentralized digital asset, and other digital assets, such as ether, are fundamentally different from traditional assets and present unique properties that can serve as a hedge against inflation and economic volatility,” the bill acknowledges.

“The creation of a strategic digital asset reserve will also help to diversify the Commonwealth's funds, potentially enhancing returns and mitigating risk over the long term.”

The legislation mandates biennial reporting of the digital asset holdings and their US dollar value.

In a move towards transparency, the public addresses of all state-held digital assets will be published on an official state website. The state treasurer will also be required to implement regular independent testing and auditing of the digital asset management processes.

The bill further allows South Carolina residents to make donations of digital assets to the reserve through an approved vendor process.

If enacted, the legislation will remain in effect until September 1, 2035.