A new bill introduced in South Carolina proposes the creation of a state-run Bitcoin reserve with a cap of 1 million BTC. 

Filed on Mar. 27, South Carolina’s Strategic Digital Assets Reserve Act seeks to give the state treasurer the authority to hold Bitcoin (BTC) and other digital assets as a hedge against inflation. According to the bill, inflation has reduced the purchasing power of retirement funds and state-managed assets.

To protect its finances, South Carolina wants to diversify them. Bitcoin is viewed as a possible hedge against economic volatility. The proposed Digital Assets Reserve would enable the state to own and manage Bitcoin while also allowing South Carolinians to voluntarily donate digital assets. 

The bill sets clear investment guidelines, requiring safe storage through cold wallets or certified custodians and capping holdings of digital assets at 10% of total funds under management. Additionally, the state is only permitted to hold a maximum of 1 million BTC.

If passed, South Carolina’s state treasurer would be allowed to invest unused or uncommitted funds from sources like the General Fund and Budget Stabilization Reserve Fund into the reserve. The state treasurer would be required to publish public addresses of the reserve’s holdings to maintain transparency and enable citizens to confirm transactions.

The proposal comes as South Carolina pushes to reverse its stance on crypto regulation. On a Mar. 27 post on X, Coinbase chief legal officer Paul Grewal revealed that the state has dropped its lawsuit against Coinbase’s staking services, paving the way for the exchange to relaunch staking for residents. 

Grewal noted that South Carolina users lost nearly $2 million in staking rewards due to the legal battle and celebrated the lawsuit’s dismissal as a win for consumer rights. He pointed out that 52 million Americans own crypto and need clear rules and consumer protections. Grewal praised South Carolina for its decision and said he hopes other states with staking bans will follow.