South Carolina Proposes Creation of a Bitcoin Reserve with a Cap of 1 Million BTC

A new bill introduced in South Carolina proposes the creation of a state-run Bitcoin reserve with a cap of 1 million BTC.

A new bill introduced in South Carolina proposes the creation of a state-run Bitcoin reserve with a cap of 1 million BTC.

Filed on Mar. 27, South Carolina’s Strategic Digital Assets Reserve Act seeks to give the state treasurer the authority to hold Bitcoin (BTC) and other digital assets as a hedge against inflation and to diversify state finances.

The bill notes that inflation has reduced the purchasing power of retirement funds and state-managed assets, necessitating a move to preserve the value of public finances. To do so, the state wants to diversify its finances and invest in assets that can serve as a hedge against economic volatility.

Bitcoin is seen as a possible hedge and provides an opportunity for citizens to voluntarily contribute to the reserve. The proposed Digital Assets Reserve would enable the state to own and manage BTC while also allowing South Carolinians to voluntarily donate digital assets.

The bill sets clear investment guidelines, requiring safe storage through cold wallets or certified custodians and capping holdings of digital assets at 10% of total funds under management. Additionally, the state is only permitted to hold a maximum of 1 million BTC.

If passed, South Carolina’s state treasurer would be allowed to invest unused or uncommitted funds from sources like the General Fund and Budget Stabilization Reserve Fund into the reserve. The state treasurer would be required to publish public addresses of the reserve’s holdings to maintain transparency and enable citizens to confirm transactions.

The proposal comes as South Carolina pushes to reverse its stance on crypto regulation. On a Mar. 27 post on X, Coinbase (NASDAQ:COIN) chief legal officer Paul Grewal revealed that the state has dropped its lawsuit against Coinbase’s staking services, paving the way for the exchange to relaunch staking for residents.

"The dominoes keep falling. South Carolina just joined Vermont to dismiss its unfounded staking lawsuit against @Coinbase. Staking will very soon be back for Coinbase users in South Carolina," Grewal wrote.

The lawsuit, filed in December 2022, saw South Carolina sue Coinbase over its crypto staking services, which the exchange had to suspend for residents of the state. The lawsuit was part of a broader move by the state to ban crypto staking services due to concerns over potential risks to consumers.

However, Coinbase argued that its services were compliant with federal securities laws and that the state’s actions were an overreach of its regulatory authority.

Grewal noted that South Carolina users lost nearly $2 million in staking rewards due to the legal battle and celebrated the lawsuit’s dismissal as a win for consumer rights. He pointed out that 52 million Americans own crypto and need clear rules and consumer protections.

"We thank South Carolina for its decision and hope that other states with similar no-staking orders will follow suit," Grewal added.

The post Coinbase reports South Carolina drops lawsuit, will restart staking services appeared first on Chain Link.

The post Coinbase reports South Carolina drops lawsuit, will restart staking services appeared first on Chain Link.

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