Three of America’s 50 states are expected to create local Bitcoin reserves soon. The bills differ from the proposal of the American Bitcoin National Reserve and show local specifics.
America is bullish on Bitcoin. Presumablyevery fifth American owns some BTC. While the president of the United States is pushing to create a strategic reserve of Bitcoin, the states are working on local reserves. Ohio and Texas proposals to create such reserves are about to pass; Pennsylvania follows suit, while other states make their own decisions.
What are the specifics of the local proposals compared to the federal project?
The main distinction is that the local proposals have different final goals when compared with the proposal at the federal level. The federal bill is intended to cover the national debt and calls for the purchase of one million BTC that must be kept in the US Treasury.
The Texas project is aimed at accumulating bitcoins by collecting taxes and donations in cryptocurrency. In addition to this, Texas has a minimum five-year embargo on the sale of state-owned bitcoins. Ohio and Pennsylvania are willing to accumulate some BTC as a hedge against the eroding USD value. Bitcoins must be bought from local treasurers. The bills do not elaborate precisely on the terms.
The fact of Cynthia Lummis
The Federal Reserve bill was introduced in July 2024 by Wyoming Senator Cynthia Lummis. His proposal it is called Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act. The Lummis bill is expressly presented as a means to pay off the national debt of the United States.
In addition to the national debt, Lummis mentions rising inflation rates in the introduction and calls the creation of the reserve a moment of Louisiana purchase. Comparing large-scale Bitcoin purchases to US land acquisitions in the past has become a popular trope among Bitcoin maximalists.
According to Lummis’ proposal, Bitcoin is seen as an additional store of value in the federal budget. The bill suggests that the government should establish a decentralized network controlled by the US Treasury of Bitcoin cryptos. In addition to this, the government must buy one million BTC, which is about 5% of the total supply. The amount is dictated by the fact that the United States already has 5% of all gold. Private holders of Bitcoin should be given the rights of self-custody.
The local bills
The local bills of Texas and Ohio do not include direct intentions to buy a specific amount of BTC in a certain period, nor are they intended to eliminate state debts.
U bill of texas was introduced by Texas State Representative Giovanni Capriglione on December 12. The project suggests that local residents will be able to use cryptocurrency to pay their taxes. In addition to this, Texans will be able to donate cryptocurrency to the state. All crypto will be exchanged for Bitcoin.
Donations, taxes and other payments to state agencies will be the main ways for Texas to accumulate bitcoins. Accumulated BTC must be stored offline untouched for at least five years. Like Lummis, Capriglione mentioned inflation as one of the biggest enemies while talking about the need for the Bitcoin reserve. Texas has been an attractive location for Bitcoin miners due to low electricity costs and various incentives.
During the CNBC interview released on December 24, Centrifuge general counsel Eli Cohen said implementation can be challenging. He notes that tax authorities may find it difficult to collect taxes in BTC and identify taxpayers. If tax authorities ask taxpayers to provide their BTC wallets, taxpayers may feel reluctant to obey.
On December 17, the rep. Derek Merrin introduced the Ohio bill known as the Ohio Bitcoin Reserve Act. The act suggests that the Ohio treasury has set up the Bitcoin fund and will be able to invest money in Bitcoin. Bitcoin is seen as a hedge against the devaluation of the USD. In contrast to Lummis’ proposal, the bill has no mention of specific Bitcoin purchases or allocations. By 2022, Ohio would have a debt of $72.16 billion. It is possible that the BTC reserve could facilitate the redemption of the debt. The bill will be worked on by legislators in 2025.
U Pennsylvania bill was introduced in November. His first suggestion is that the state will be able to invest 10% of the General State Fund in Bitcoin to fight against inflation. This means that almost a billion dollars can be spent in bitcoins.
Will these bills pass?
The bills mentioned above have been introduced. There is no guarantee that they will pass. On averageonly 20% of bills introduced at the state level become law. In Texas, Ohio and Pennsylvania, this number is even lower. According to the New Healthcare Bill Acts, only 4.5% of the bills presented in the 115th Congress became law. So, statistically, the chances are not that high. In practice, it depends on many factors, not the least of which is the persistence of lobbyists. Cohen believes that Lummis is a strong Bitcoin advocate with decent experience, and his bill has a good chance.
However, the Lummis Act may fail in Congress. It receives some criticism in the crypto community as well. For example, a passionate cryptographic writer Nic Carter, notice that while the Bitcoin reserve (as a store of seized bitcoins) may be beneficial, the strategic Bitcoin reserve (as a reserve of bitcoins purchased by the government) will not strengthen the price of the dollar (as ‘and supposed by the strategic defenders of Bitcoin reserve). ) but will do the opposite.
The reason is clear: giving Bitcoin a monetary role in the country that issues the dollars is signaling the departure from an inconvertible fiat standard, that is, questioning the value of the dollar, therefore risking the role of the United States in the global economy. We cannot claim, however, that Carter’s concerns are the current mainstream. Quite the opposite.
If the strategic reserve of Bitcoin is not created while the state-level reserves are successfully set up, they can play a leading role in exploring the government’s accumulation and storage of Bitcoin and turn them into hubs of international cryptocurrency. If all bills fail, new ones will follow.
