From the successful strategic land purchases in the United States to Bitcoin reserves: the forward-looking conception of the 2025 Bitcoin Strategic Reserve Draft

In the first part of the draft, the 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 the state government cannot control the federal monetary supply and macroeconomic policies, they have a responsibility to protect the financial health of the state.

Author: Aiying Team

Cover: Photo by Shubham's Web3 on Unsplash

At the intersection of the cryptocurrency and traditional finance worlds, a new legislative proposal is generating widespread discussion. This draft bill, titled the "2025 Bitcoin Strategic Reserve Act", was drafted by the Bitcoin advocacy organization Satoshi Action Fund, with the aim of incorporating 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 forward in the face of increasing global economic uncertainty, to combat inflation and enhance financial resilience.

One, Bitcoin: The New "Gold" of State Governments?

With the inauguration of Trump, Aiying's previous article introduced the details of the "American Bitcoin Strategic Reserve Act": purchasing 200,000 bitcoins per year, reaching 1 million bitcoins within five years, and it is now closer to practical implementation, even proposing the "Bitcoin Strategic Reserve Act of 2025", with the goal of authorizing state financial officers to include Bitcoin in fiscal reserves to hedge against asset depreciation caused by inflation.

Of course, Aiying Ying reviews the numerous major strategic acquisitions in American history, such as the acquisition of Manhattan, the Louisiana Purchase case, and the 19th century purchases of California and Alaska, all of which have brought trillions of dollars in returns to the United States. These acquisitions initially seemed risky, but were ultimately proven to be a huge contribution to America's economic and strategic position.

The same logic can be applied to the potential acquisition of Bitcoin today. As a forward-looking strategic asset, Bitcoin has a 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 of the digital age, has similar characteristics to traditional resources such as gold and oil. By purchasing Bitcoin and incorporating it into state fiscal reserves, the United States can continue the successful experience of achieving great accomplishments in history, 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", the legislators clearly point 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 government's monetary supply and macroeconomic policies, they have a responsibility to protect the financial health of the state. Therefore, Bitcoin, as an anti-inflationary asset, has been put on the agenda. Data shows that Bitcoin's market value has soared rapidly in the past 16 years, now exceeding $1 trillion, which undoubtedly proves its potential in anti-inflation.

Two, Flexibility and Innovation: What is the Intent of the New Legislation?

In the draft, state governments plan to enact legislation to allow Bitcoin and other digital assets to be included in the investment portfolio of state finances, as a means to address inflation and economic uncertainty. The core objectives of the legislation are:

• Protect the purchasing power of state finances and prevent asset depreciation due to inflation.
• Enhance returns by adopting flexible investment policies that can quickly respond to market changes.
• Ensure that the investment strategy is in line with the goal of enhancing the economic security and financial resilience of the state.

The bill particularly emphasizes flexibility. In the context of an increasingly complex and volatile 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 cope with market risks.

Three, Secure Custody: Measures to Protect Digital Assets

In terms of holding and managing digital assets, the draft sets strict requirements for security. Specifically, the custody of Bitcoin includes three options: direct holding by the state treasury, holding through qualified custodians, or holding through registered exchange-traded products (ETPs). At the same time, to ensure the security of digital assets, the draft proposes a "secure custody solution" - requiring private keys to be controlled solely by the government and stored in an encrypted environment, with measures such as geographically dispersed data centers and multi-party governance structures to ensure the security and stability of the assets. This is intended 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:

• Exclusive 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 storing private keys must be kept in at least two geographically separated secure data centers to mitigate the risk of single-point failures.
• Multi-party governance structure: Authorization for each transaction must go through a multi-party governance structure to ensure that all transactions are subject to strict approval and recording.
• Disaster recovery mechanism: Custodian service providers must have a comprehensive disaster recovery mechanism to ensure that the state government can still access and manage the assets if the provider is unable to perform its duties.
• Periodic code audits: The custody solution must undergo regular code audits and penetration testing by audit firms, and any vulnerabilities found must be promptly fixed.

Four, Bitcoin Taxation: A New Source of Funding for Public Services?

The fifth part of the bill deals with the payment method for 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 in 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 in Bitcoin is as follows:

• Tax payment: Taxpayers can use Bitcoin to pay taxes, and these Bitcoins will first enter the state's general fund account.
• Fund conversion: The state's general fund will compensate the designated digital asset account with an equivalent US dollar amount to ensure financial balance.
• Transparent management: Through blockchain technology, the inflow and outflow of Bitcoins are made public and transparent, reducing the risk of corruption and misuse of funds.

In addition, the draft also allows state pension funds to invest in registered digital asset exchange products, further enriching the investment channels. These measures indicate that Bitcoin is not only a tool to fight inflation, but may also become part of the funding source for public services, gradually integrating into people's daily lives.

V. The Legislation Behind: An Experiment in Financial Innovation

The "2025 Bitcoin Strategic Reserve Act" is undoubtedly an unprecedented attempt and a microcosm of the modernization of the financial system. With the passage of the "Bitcoin Rights" Act in Pennsylvania, the introduction of this strategic reserve act seems logical and far-reaching. As an advocate of Bitcoin, the Satoshi Action Fund is trying to promote the application of Bitcoin in a wider range of fields through such legislation, providing lawmakers with a perspective on understanding blockchain technology and helping them seize the opportunities of the digital age in the policy-making process.
Of course, to address the risks of large fluctuations in Bitcoin, the draft proposes some risk control measures:

• Investment cap: The state's financial investment in Bitcoin shall not exceed 10% of the total amount of the relevant fund, to prevent over-reliance on a single asset.
• Asset lending: Without increasing financial risk, the state's finance can obtain additional income by lending Bitcoins, but must follow the rules set by the state's financial officials.
• Diversified investment strategy: Encourage state governments to continue investing in other traditional financial assets while introducing Bitcoin, to ensure the overall stability of the 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 "2025 Bitcoin Strategic Reserve Act" is full of ambition, trying to enhance the resilience and flexibility of public funds by incorporating the emerging digital asset of Bitcoin into the state's fiscal system. Behind the legislation, there is both an urgent need to promote financial modernization and a cautious prevention of emerging risks. Whether this experiment can succeed and provide a new paradigm for future government investment and financial innovation, let's wait and see. Aiying FundInsight will continue to support Web3 and traditional financial institutions, helping them move steadily forward in this unprecedented transformation and innovation.

Draft link: https://www.satoshiaction.io/sbr

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