The Bitcoin strategic reserve bill is creating a legislative wave in the US. Traditional finance faces disintermediation risk, market share erosion, regulatory dilemmas like compliance complexity and jurisdictional conflicts. Possible responses include innovating financial products, enhancing risk management, and collaborating with fintech to adapt to the new situation.

• Disintermediation Risk: Traditional banks may face disintermediation as public funds invest in Bitcoin. For example, if more states follow Utah's lead, funds that would have been in traditional bank - held accounts could flow into Bitcoin, reducing banks' deposit bases.

• Market Share Erosion: The growing acceptance of Bitcoin in state - level asset allocation may erode the market share of traditional financial products. Bonds and stocks might see less investment as Bitcoin becomes an alternative in the asset portfolios of institutions.

• Compliance Complexity: Traditional financial institutions operate under strict regulatory frameworks. The emergence of Bitcoin - related state - level legislation adds complexity to compliance. They need to figure out how to comply with new rules while still adhering to existing financial regulations.

• Jurisdictional Conflicts: As different states have varying stances on Bitcoin, financial institutions with a national or international presence may face jurisdictional conflicts. They must navigate different regulatory requirements in different states, which can be resource - intensive.

• Innovation in Financial Products: Traditional financial institutions may innovate to compete. They could develop Bitcoin - related financial products, such as Bitcoin - linked derivatives, to attract investors who are interested in the digital asset while still operating within the boundaries of traditional finance.

• Enhanced Risk Management: Given the volatility of Bitcoin, traditional finance will need to enhance its risk management. This includes developing new risk assessment models to evaluate the impact of Bitcoin - related investments on their overall portfolios.

• Collaboration with Fintech: Partnering with fintech companies can help traditional finance better understand and integrate Bitcoin - related activities. Fintech firms have more expertise in the digital asset space, and collaboration can bring new insights and capabilities.