South Carolina takes a significant step toward integrating digital assets into state-level financial strategy.

On March 27, the state lawmakers introduced a new bill to create a Bitcoin reserve to safeguard public funds from inflation.

South Carolina has taken a significant step toward integrating digital assets into state-level financial strategy.

The state lawmakers introduced a new bill to create a Bitcoin reserve to safeguard public funds from inflation. At the same time, the state dropped its lawsuit against Coinbase (NASDAQ:COIN) over alleged securities violations tied to its staking services.

Representative Jordan Pace unveiled a bill that would allow South Carolina to invest some of its public funds in Bitcoin. The Strategic Digital Assets Reserve Act (H4256) aims to provide a hedge against inflation and economic instability.

The legislation would empower the State Treasurer to allocate up to 10% of state-held funds to Bitcoin, with a maximum limit of 1 million BTC. The funds for these investments would come from existing sources such as the General Fund and the Budget Stabilization Reserve Fund.

Furthermore, the bill sets transparency standards by requiring the public disclosure of wallet addresses linked to the Bitcoin reserve. This would enable citizens to monitor transactions and verify holdings on the blockchain.

In a unique provision, the bill permits residents to make voluntary Bitcoin contributions. The proposal also outlines strict storage requirements to protect the assets, specifying the use of cold wallets or certified custodians.

In other developments, South Carolina has decided to withdraw its legal challenge against Coinbase. The case, which accused the crypto exchange of violating securities laws through its staking services, was filed in June 2023.

The dismissal follows an agreement between the state’s securities division and Coinbase.

Coinbase’s Chief Legal Officer, Paul Grewal, expressed optimism that other states—such as California, New Jersey, and Illinois—would follow suit in dropping their lawsuits against the exchange.

“It’s no secret that we’re disappointed state regulators sued Coinbase over its crypto staking products, especially given the urgent need for accessible and high-yielding savings vehicles for everyday Americans in today’s high inflation environment,” Grewal said in a statement.

He added that the lawsuit had prevented nearly $2 billion in staking rewards from reaching South Carolina residents.

“This lawsuit was a distraction from the important work of protecting investors and fostering innovation in the state,” he said.

“We are grateful to the state for dismissing the lawsuit and hope that other states—such as California, New Jersey, and Illinois—will follow suit.”

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South Carolina is introducing legislation to create a Bitcoin reserve in a move to diversify state assets and protect public funds from inflation.

The Strategic Digital Assets Reserve Act (H4256), introduced by Representative Jordan Pace, would authorize the State Treasurer to allocate up to 10% of state-held funds to Bitcoin, with a maximum limit of 1 million BTC.

The funds for these investments would come from existing sources such as the General Fund and the Budget Stabilization Reserve Fund.

The bill also mandates the disclosure of wallet addresses linked to the Bitcoin reserve, enabling citizens to independently monitor transactions and verify holdings on the blockchain.

Moreover, the legislation permits residents to make voluntary Bitcoin contributions, which would be used to increase the reserve.

The bill sets forth strict requirements for the storage and security of Bitcoin, emphasizing the use of cold wallets or certified custodians to safeguard the assets.

In a related development, South Carolina has decided to drop its lawsuit against Coinbase (NASDAQ:COIN), which was filed in June 2023, over allegations of securities violations tied to the exchange’s staking services.

The case, which is now dismissed, accused Coinbase of selling unregistered securities to customers in the state.

The lawsuit followed a pattern of legal challenges by state regulators against crypto firms over their DeFi and Web3 services.

Earlier in March, Vermont dropped its lawsuit against Coinbase, and the US Securities and Exchange Commission (SEC) ended its case against the exchange in February.

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