Chris Rose, a West Virginia State senator, has proposed legislation that would allow the West Virginia Treasury Department to diversify their holdings to include digital assets as well as precious metals.
In the Inflation Protection Act of 2020, which was submitted on February 14, it proposes allowing investments in digital assets that have a capitalization of more than $750 billion.
Currently, this applies only to Bitcoin (BTC), with Ethereum’s (ETH) $328.3 billion market cap being more than 50% below the mandated threshold.
Bill would limit investments in digital and precious metals to 10% of the total Treasury funds. This allows flexibility for holding assets on-chain, or via exchange-traded fund (ETF) vehicles.
Many proponents of diversification argue that it could be a way to protect against inflation, and even fiscal instability.
A growing trend in states
West Virginia, along with almost a dozen other US states, is considering the use of digital asset reserves in order to protect their public funds from devaluations. Wyoming was the first state to adopt this trend, in 2024.
On Feb. 6, Utah’s House of Representatives approved a similar bill, which now awaits a Senate vote. If passed, it would authorize the state’s treasury to allocate funds into Bitcoin, high-value altcoins, and stablecoins, reflecting a broader acceptance of digital assets as legitimate reserve instruments.
Kentucky also introduced legislation on the same date to allow up to 10% state funds to go to Bitcoins and digital assets. This follows a growing interest by legislators in using digital currency as a store of value to combat inflation and the rising national debt.
Michigan, too, followed suit with the introduction of a Digital Asset Reserve Bill by Representatives Bryan Posthumus & Ron Robinson on February 13. The Michigan proposal is different from similar measures taken in other states because it does not limit the types of assets. This could allow for more crypto investment options.
Texas, Wyoming North Dakota North Carolina South Dakota Massachusetts New Hampshire Ohio Pennsylvania Maryland Iowa Arizona Oklahoma Tennessee Wisconsin Several other states, including Texas and Wyoming, have also called for the same legislative actions.
As part of his executive order, signed just last month, Donald Trump directed at the federal level a group of working people to examine the feasibility of creating a digital assets reserve.
This initiative has led to speculation that states could act before federal policymakers and integrate Bitcoin into their government financial strategies.
The economic impact
Analysts say that an increase in state adoption of Bitcoin reserve could lead to a surge in demand for the digital asset, which may influence financial markets and market prices.
VanEck has conducted a study that suggests states could increase Bitcoin demand by up to 23 billion dollars if they adopt such legislation.
As state treasuries treat Bitcoin alongside gold and other traditional reserves of value, this trend might also spur greater institutional participation in the digital asset market.
Experts in finance predict that efforts to integrate digital currencies into public funds are likely to gain momentum as more and more states implement similar measures. However, critics warn that Bitcoin’s price volatility could pose risks to public treasuries, requiring careful risk management strategies.
As lawmakers and analysts watch closely how West Virginia manages to navigate the challenges and benefits of adopting digital assets, the bill is now referred for committee review.
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