Author: AY FundInsight
At the intersection of the worlds of cryptocurrency and traditional finance, a new legislative proposal is sparking widespread discussion. The draft, titled "Bitcoin Strategic Reserve Act of 2025," was drafted by the Bitcoin advocacy organization Satoshi Action Fund and aims to incorporate Bitcoin as a strategic reserve tool into the fiscal systems of U.S. states. This is not only an unprecedented attempt, but also a bold step to combat inflation and enhance financial resilience amid growing uncertainty in the global economy.
1. Bitcoin: The new “gold” of state governments?
With Trump coming to power, Aiying's previous article introduced and explained the "U.S. Bitcoin Strategic Reserve Act": purchasing 200,000 bitcoins each year, reaching 1 million within five years, which is one step closer to reality. It has even proposed the "Bitcoin Strategic Reserve Act of 2025", which aims to authorize state finance officials to include Bitcoin in fiscal reserves to resist asset depreciation caused by inflation.
Of course, Aiying Aiying recalled that there were many major strategic purchases in American history, such as the acquisition of Manhattan, the Louisiana Purchase, and the purchase of California and Alaska in the 19th century, all of which brought trillions of dollars in returns to the U.S. These acquisitions seemed risky at first, but ultimately proved to be a huge contribution to the U.S. economy and strategic position.
The same logic can be applied to potential purchases of Bitcoin today. As a forward-looking strategic asset, Bitcoin has scarcity and long-term appreciation potential similar to those important resources in history. Historically, the United States has expanded its territory, economic base, and strategic security by purchasing land and resources. Today, Bitcoin, as a strategic asset in the digital age, has similar characteristics to traditional resources such as gold and oil. By purchasing Bitcoin and including it in state fiscal reserves, the United States can continue this successful experience of great historical achievements and extend its financial dominance to the new era of the digital economy.
In the first part of the Bitcoin Strategic Reserve Act of 2025, legislators clearly pointed out that inflation has seriously eroded the purchasing power of state finances and retirement funds, affecting the economic well-being of residents. Although state governments cannot control the federal money supply and macroeconomic policies, they have the responsibility to protect the financial health of the state. Therefore, Bitcoin, as an anti-inflation asset, has been put on the agenda. Data shows that Bitcoin's market value has soared rapidly in the past 16 years and now exceeds 1 trillion US dollars, which undoubtedly proves its potential in anti-inflation.
2. Flexibility and innovation: What is the intention of the new legislation?
In the draft, the state government plans to pass legislation to allow Bitcoin and other digital assets to be included in the state's fiscal investment portfolio as a means of dealing with inflation and economic uncertainty. The core goal of the legislation is to:
- Protect the purchasing power of state finances and prevent assets from depreciating due to inflation.
- Through flexible investment policies, we can respond quickly to market changes and increase returns.
- Ensure investment strategies are consistent with the goal of enhancing the state’s economic security and financial resilience.
The bill places special emphasis on flexibility. In the context of an increasingly complex and rapidly changing global economy, traditional investment models often appear too rigid, while the introduction of digital assets such as Bitcoin provides more diverse options for investment portfolios, allowing state governments to better respond to market risks.
3. Secure custody: safeguards for digital assets
In terms of holding and managing digital assets, the draft has set strict requirements for security. Specifically, there are three ways to hold Bitcoin: directly held by state finances, held on behalf of qualified custodians, or held through registered exchange-traded products (ETPs). At the same time, in order to ensure the security of digital assets, the draft proposes a "secure custody solution" - requiring private keys to be controlled only by the government and stored in an encrypted environment, and ensuring the security of assets through measures such as geographically dispersed data centers and multi-party governance structures. This move aims to eliminate public concerns about the security of digital assets and ensure the security and stability of digital assets in custody and management.
Specifically, the “Secure Custody Solution” includes the following measures:
- Proprietary control of private keys: Encryption private keys must be held by government entities and can only be accessed in an end-to-end encrypted environment.
- Geographically dispersed data centers: The hardware devices of private keys must be kept in at least two geographically dispersed secure data centers to prevent the risk of failure in a single location.
- Multi-party governance structure: The authorization of each transaction must go through a multi-party governance structure to ensure that all transactions are strictly approved and recorded.
- Disaster Recovery Mechanisms: The hosting service provider must have a comprehensive disaster recovery mechanism to ensure that the state government can still access and manage assets if the provider is unable to perform its duties.
- Regular code audits: Hosting solutions must undergo regular code audits and penetration testing by auditing firms, and any discovered vulnerabilities must be fixed promptly.
4. Bitcoin taxation: a new source of funding for public services?
The fifth part of the bill deals with the payment method of taxes and fees. According to the draft, taxes and fees paid in Bitcoin will be transferred to the state's general fund, and the state fund will compensate the corresponding digital asset account with US dollars. This arrangement not only ensures the flexible use of funds, but also means that the acceptance of Bitcoin at the state level has been significantly improved.
Specifically, the process of paying taxes with Bitcoin is as follows:
- Tax Payments: Taxpayers can pay their taxes using Bitcoin, which will first go into the state’s general fund account.
- Fund Conversion: The state general fund will be reimbursed in an equivalent dollar amount to the designated digital asset account to ensure financial balance.
- Transparent management: Through blockchain technology, the Bitcoin income and expenditure process is open and transparent, reducing the risk of corruption and abuse of funds.
In addition, the draft also allows state retirement funds to invest in registered digital asset exchange products, further enriching investment channels. These measures show that Bitcoin is not only a tool to fight inflation, but may also become part of the funding source for public services and gradually integrate into people's daily lives.
5. Behind the legislation: an experiment in financial innovation
The Bitcoin Strategic Reserve Act of 2025 is undoubtedly an unprecedented attempt and a microcosm of the modernization of the financial system. With the passage of the "Bitcoin Rights" bill in Pennsylvania, the introduction of this strategic reserve bill seems logical and far-reaching. As an advocate of Bitcoin, Satoshi Action Fund attempts to promote the application of Bitcoin in a wider range of fields through such legislation, provide legislators with a perspective to understand blockchain technology, and help them seize the opportunities of the digital age in the process of policy making.
Of course, in order to deal with the risks of large fluctuations in Bitcoin, the draft proposes some risk control measures:
- Investment cap: State fiscal investment in Bitcoin should not exceed 10% of the total relevant fund to prevent over-reliance on a single asset.
- Asset Lending: State finances can earn additional income by lending Bitcoin without increasing financial risk, but must follow the rules set by state finance officials.
- Diversified investment strategy: State governments are encouraged to continue investing in other traditional financial assets while introducing Bitcoin to ensure the stability of the overall investment portfolio.
Whether this proposal can be widely accepted and implemented remains to be discussed and evaluated by state governments and the public. But it is undeniable that the idea is worth learning from.
In short, the Bitcoin Strategic Reserve Act of 2025 is ambitious and attempts to enhance the resilience and flexibility of public funds by incorporating Bitcoin, an emerging digital asset, into the state fiscal system. Behind the legislation, there is both an urgent need to promote financial modernization and a cautious precaution against emerging risks. Whether this experiment will succeed and provide a new paradigm for future government investment and financial innovation, let us wait and see. Aiying FundInsight will continue to provide support for Web3 and traditional financial institutions to help them move forward steadily in this unprecedented transformation and innovation.
Draft link: https://www.satoshiaction.io/sbr
