Utah is on the verge of becoming the first US state to adopt Bitcoin as a reserve asset, with its HB230 bill advancing through the Senate. Montana is also moving forward with similar legislation to include Bitcoin and other assets in a special reserve fund.
Bitcoin is America’s Best Financial Weapon
Michael Saylor, the founder of Strategy, firmly believes in the importance for the United States to establish a strategic Bitcoin reserve, and recently said that America should try to buy 20% of the Bitcoin network. At the CPAC conservative movement conference in Washington, D.C., Saylor stated that only one nation-state could realistically accumulate such a large portion of the network, and he believes it should be the United States. He suggested that with a big Bitcoin reserve, the nation will strengthen its currency, enrich itself, and even potentially use its holdings to pay off the national debt.
Saylor also pointed out some of the risks of allowing other global powers to take the lead in Bitcoin accumulation, and warned that the US should act before nations like Saudi Arabia, Russia, China, or European countries seize the opportunity. At current market prices, buying 20% of Bitcoin’s circulating supply will require an investment of approximately $392 billion. To put this into perspective, the US Strategic Petroleum Reserve holds around 395 million barrels of oil valued at an estimated $29 billion, making Bitcoin a much larger financial commitment.
When questioned about the inclusion of other cryptocurrencies in a potential US reserve, Saylor was quick to avoid mentioning any digital asset other than Bitcoin. He believes in Bitcoin’s unique status as a decentralized commodity without an issuer, and specifically mentioned its resilience against corruption by any entity. He also argued that Bitcoin reached “escape velocity,” which solidified its dominance in the digital asset space.
During the discussion, Saylor also talked about the competitive challenges companies face against monopolistic tech giants. He pointed to Bitcoin’s decentralized nature as a revolutionary escape from traditional power structure as it provides people and small companies with unprecedented financial empowerment. He credited Satoshi Nakamoto for creating a strategy that allows people to gain economic strength beyond the control of the state.
Strategy turned itself into the largest corporate holder of Bitcoin by amassing 478,740 BTC that is currently valued at approximately $47 billion. The firm’s Bitcoin portfolio yielded some very impressive results, with an average purchase price of $65,000 per coin. This resulted in a 51% profit, or roughly $16 billion. Additionally, this strategic Bitcoin accumulation propelled Strategy’s stock price by 360% over the past year.
Strategy Bitcoin holdings (Source: Saylortracker)
Saylor also spoke about the broader shift in global capital flows, and noticed that wealth is increasingly migrating from the physical world to cyberspace. He described this transition as a movement from 20th-century financial systems to a digital economy, where artificial intelligence and high-speed computations will play a dominant role.
Utah Moves Closer to Adopting a Bitcoin Reserve
It seems like many US states share the same vision for Bitcoin. Utah recently took a major step toward making Bitcoin a state reserve asset after its Bitcoin reserve bill passed through the Senate Revenue and Taxation Committee.
The HB230 “Blockchain and Digital Innovation Amendments” bill advanced with a 4-2-1 vote on Feb. 20 and now moves to the next stages of the legislative process, requiring a second and third reading before a final Senate vote. Having already passed through the House, the bill only needs Senate approval and the signature of Governor Spencer Cox to become law.
The bill received strong support from Republican lawmakers, with all four votes in favor coming from the party. One Republican and one Democrat opposed the bill, while one senator was absent. If enacted, the bill will establish Bitcoin as a reserve asset for the state, which is a milestone that no other US state achieved yet. The proposed law requires that any digital asset included as a reserve must have maintained an average market capitalization of at least $500 billion over the previous calendar year. Bitcoin is currently the only crypto that meets this criterion. Ethereum only briefly surpassed the threshold in late 2021.
The legislation also allows the state treasurer the authority to engage in crypto staking, which could pave the way for Ethereum and other proof-of-stake assets to be included in the future. The bill permits up to 5% of digital assets to be allocated to five different state accounts, including the General Fund Budget, Income Tax Fund Budget, and State Disaster Recovery accounts. These assets will need to be held either with a qualified custodian or through an exchange-traded fund.
If the bill clears the final legislative hurdles, it is set to take effect on May 7. Utah made a lot of progress in developing regulatory clarity for Bitcoin and digital assets, which allowed it to surpass other states in the race to establish a Bitcoin reserve. Dennis Porter, the CEO of the Satoshi Action Fund, believes Utah’s legislative efficiency and political factors could lead it to become the first state in the US to adopt such a measure.
Several other states, including Arizona, Illinois, Kentucky, Maryland, Montana, New Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, and Texas, also introduced bills to establish a Bitcoin reserve, but none have progressed as far as Utah.
Montana Advances Bitcoin Reserve Bill
Montana also recently took a big step toward recognizing Bitcoin and other digital assets as reserve assets after the House Business and Labor Committee passed House Bill No. 429. The bill advanced with a 12-8 vote on Feb. 19, with all Republican lawmakers supporting it and all Democrats opposing it. If enacted, the legislation will create a special revenue account dedicated to investing in precious metals, stablecoins, and digital assets that have maintained an average market cap of at least $750 billion over the past calendar year.
As is the case with Utah, Bitcoin is the only digital asset that meets this requirement, which positions it as the primary cryptocurrency that could be included in Montana’s reserve holdings. The bill now moves to Montana’s House, which is an important milestone in the legislative process.
A notable amendment to the bill removed the requirement that funds must be held by a qualified custodian or through an exchange-traded fund, potentially offering the state more flexibility in how it manages its investments. If the bill clears all legislative hurdles, it is set to take effect on July 1, and will allow the state treasurer to allocate up to $50 million to the special account by July 15.
This article was originally Posted on Coinpaper.com
